Monthly Archives: January 2024

The British Pound was the top-performing major currency in January, supported by generally positive sentiment towards global risk and a decrease in expectations for the scale of interest rate reductions that the Bank of England is expected to impose in the months to come.

Data-wise, the main highlights of yesterday’s calendar were the raft of Q4 GDP readings from the Eurozone, consisting of Spanish, Italian, French and German.

For Q4, the GDP figures indicated a declining Eurozone economy, with small growth noticed in Spain and Italy, a decrease in Germany, and stagnation in France.

The US Federal Reserve’s January policy meeting will be the focus of attention today. No change in rates is the general consensus.

 As a result, the meeting statement and Fed Chair Powell’s press conference will be closely watched for clues regarding the timing of the first rate cut.

Yesterday, the tone on the markets was mixed. US business earnings releases, below-consensus data in the Eurozone, and volatility influenced sentiment throughout the day.

Eurozone consumer confidence fell to -16.1 in January, the lowest level since October (vs. -14.3 forecast).

Elsewhere, the ECB’s bank lending survey revealed that credit demand fell further in Q4, as credit conditions tightened. Overall, the data implies that consumption and investment in the Eurozone were low in the fourth quarter.

Today, the flash PMI readings for January in the major advanced economies are due. The numbers are projected to have barely changed since December. Therefore, barring any huge surprises, the disclosures are unlikely to have an influence on markets.

On the currency front, the dollar was trading firmer. However, the dollar gave back some of its gains. This continued overnight.

This week has started quietly with no real market moving data being released, so we look ahead to Wednesday’s releases. 

Wednesday starts with a handful of Purchase Manager Index releases, with markets forecasting the UKs manufacturing sector to rise to 46.7 which is still below the 50 point growth mark. 

Investors will be looking at Thursday for the main release of the week, with the European Central Bank posting their interest rate announcement. 

Markets expect the ECB to hold rates at 4.5% after inflation stayed at 2.9%, a close eye will be kept on the ECB press conference to see where they stand on potential rate cuts for the year ahead. 

Elsewhere on Thursday there will be the US Employment figures, this will come in alongside US Gross Domestic Product figures, Markets expect this to fall to 2% a sharp decline from 4%. 

Looking at how the pound fairs in the currency market, we have seen the pound make some gains against both the euro and dollar.  

The pound is currently sitting nearly 200 basis points above last years yearly average, likewise for the pound to dollar rate. However, expect this to change as the week goes on.