Top Currency Pairs Monday 13th February 04:00 UTC GBP/USD: 1.20430 (Last Week: 1.20300) EUR/USD: 1.06622 (Last Week: 1.07900) GBP/EUR: 1.12950 (Last Week: 1.11704)
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Pound Sterling GBP enjoyed a healthy boost on Friday morning after positive GDP data coming out of the UK. Despite the economy stalling for Q4, the country avoided a technical recession last year so the report was looked upon favourably. Looking forward, inflation is set to be released this week as well as jobs data. After leaning towards the end of its tightening cycle in announcements made recently, investors will be hoping for data that would steer the next Bank of England to hike rates again in March. The inflation report on Wednesday is expected to show price increases in the double digits, with wage growth to continue rising. These releases along with narrative surrounding GDP data should put GBP in a volatile position.
Euro Underperforming economic data from the Eurozone and its largest economies meant the Euro faced headwinds for much of last week. Most notably, retail sales fell by 2.7% in December which exceeded predictions and marked the biggest decline since the beginning of 2021. This was closely followed by poor German industrial production, and despite inflation falling more than expected, it raised fears that the ECB may alter their recent hawkish tones. The strengthening US Dollar compounded the downside pressure as we look towards revised GDP tomorrow. ECB President Christine Lagarde is also set to speak on the bank's annual report on Wednesday in Strasbourg. Investors will be keeping a close eye on any clues on the economic situation.
U.S. Dollar The Dollar edged higher in European trade today, close to a five week high as we wait for the highly anticipated US inflation data tomorrow. It is expected that US CPI will show monthly rates ticked up in January. Markets are favouring the Dollar heading into this release after revisions to the previous data set showed consumer prices rise in December rather than fall. Ultimately, strong inflation could force markets to re-evaluate the Federal Reserves approach to interest rates at the next meeting, which has only been made more conflicting following on from the positive jobs report earlier in the month.
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