Market Report : 26.01.2024

Published: 26/01/2024 By ECAP

The British Pound rallied to a new 20-week high against the Euro and looks set to complete its fifth consecutive weekly advance following the European Central bank’s policy meeting. Looking forward, market participants now await next week’s BoE meeting. Should inflation forecasts show a sharp drop in inflation on the horizon, and one or two Committee members vote for an immediate rate cut, the Pound could come under pressure.

The Euro fell across the board yesterday as the European Central Bank maintained monetary policy and interest rates unchanged at 4% for the third straight meeting. The central bank reiterated that it would keep rates high for a “sufficiently long duration” to bring inflation to target. In fact, ECB President Christine Lagarde delivered dovish comments and emphasized that a pre-summer rate cut remains "likely.”

The U.S. Dollar steadied after an overnight bounce following yesterday’s strong economic growth data. In fact, signs of resilience in the U.S. economy further boosted the greenback, as fourth-quarter gross domestic product data grew more than expected. Focus now turns towards today’s key inflation reading and next week’s a Federal Reserve meeting.

Data supplied by GC Partners