Risk appetite improved last week, driven by positive inflation data, signs of a more gradual approach to US trade tariffs, and softening market rate expectations.
Inflation and Interest Rate Expectations
The UK CPI for December came in slightly lower than expected, providing some relief to inflationary concerns. Meanwhile, in the US, core CPI fell short of forecasts, while the headline rate aligned with projections. These figures contributed to shifting market sentiment and expectations around future policy moves.
In the UK, pricing now indicates an 80% chance of a rate decrease in February, with an additional 60 basis points of easing anticipated by the end of the year. Such expectations could influence investment strategies and borrowing costs in the coming months.
Currency Movements and Market Focus
On the currency front, the US dollar lost some of its recent gains last week, reflecting changing interest rate expectations and global risk appetite.
Looking ahead, this shorter trading week in the United States will focus on key political and economic events, including President Trump’s inauguration today. Additionally, the upcoming January flash PMIs for major advanced economies and UK employment market statistics will be closely monitored for further economic insights.
What This Means for You
With shifting market dynamics and economic uncertainty, staying ahead of trends is critical. Whether you’re looking to mitigate risks or capitalise on market movements, our experts at Qumoney are here to help. Get in touch today to explore tailored financial strategies designed for success in an evolving economic landscape.