Action packed week for currency markets
Daily Currency Update
This week will be packed with central bank and economic data releases, driving market sentiment and potentially increasing FX volatility. Investors will be glued to signals on future rate cuts from the Fed and the BoE, while the Eurozone recession and Chinese economic health remain in focus.Central Banks will take center stage today by releasing the Eurozone Q4 GDP data that could seal a technical recession.
Tomorrow, China's PMI release could impact market sentiment, also, the Fed may hold rates but signals on future cuts will be key.
Thursday, the Bank of England is likely to change its rhetoric for now and the Eurozone inflation data should show continued progress. Also on Friday, US non-farm payroll releases are expected to soften slightly.
Key Movers
The UK providing strong January PMIs and GfK consumer confidence data offer hope for the UK economy. The BoE could lag major peers in cutting rates, with June as the earliest potential start. The BoE is becoming increasingly out of step with G10 peers, particularly as inflation continues to fall back towards target, and as economic activity shows increasing signs of petering out, raising expectations for Governor Bailey to adopt a more cautious stance.In the Eurozone, mixed January PMIs highlight the Eurozone's economic stagnation. Lagarde's neutral stance at the ECB fuelled April rate cut bets, weakening the euro.
The USD saw strong economic data, including robust GDP and PMIs, easing concerns about the US economy. The Fed is likely to hold rates and push back against imminent easing bets. Continued dollar strength is expected if the Fed downplays March rate cuts.
Expected Ranges
- GBP/USD: 1.26827 - 1.26827 ▼
- GBP/EUR: 1.17187 - 1.17411 ▲
- GBP/AUD: 1.91822 - 1.92350 ▼
- EUR/USD: 1.08119 - 1.08119 ▼