Category Archives: FX News

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.  

Last week we had a bag of mixed data, ending with some poor figures from the UK revealing that retails sales fell to its lowest level since January 2021. For the US, there was some stronger than expected data towards the end of the week. It is a quiet start to the week in terms of economic data as markets look ahead to this Thursdays ECB policy announcement. Markets remain cautious ahead of this week’s data following the mixed figures from last week. This has prompted renewed concerns that it may be too soon to begin thinking about cutting interest rates. Central Bank policy announcements will be the centre of attention over the next two weeks with the US Federal Reserve on the 31st January and Bank of England on the 1st February. No immediate change is expected to the Central Bank announcements, but markets will be keeping a close eye on any indications of their policy intentions for the rest of the year.Tomorrow, we have the EU flash figures for Consumer Confidence, followed by Wednesday’s busy day which is dominated by PMI’s. The results of the PMI reports will provide some insight into how trends in economic activity have started in 2024. The pound ended the week at its highest level against the euro but has since dipped a little. Cable is currently sitting at a weekly high this morning.

The European Central Bank is more cautious about the growth prospects but far from forgiving on inflation. The minutes of the ECB’s December meeting show that the bank was still a long way from questioning rate cuts. This is unlikely to change during next week’s meeting.

Due to the Christmas holiday, the minutes of the ECB’s December meeting are only released one week before the next meeting. The recently announced minutes from the December meeting still include some interesting insights for next week’s meeting.

The economic data calendar is expected to be quiet today, with UK retail sales being the only significant scheduled report with the ability to influence markets.

The Office for National Statistics predicts that retail sales will dip 0.5% in December, following a stronger-than-expected 1.3% growth in November.

In the United States, economic data will be limited, but December’s existing-home sales and the University of Michigan consumer sentiment index for January will be due for release, both of which are expected to show little to no change from the previous month.

Pound Sterling’s surge following mid-week inflation numbers is now providing exceptional value to customers wanting to exchange pounds into euros.