GB Pound
↓ Sterling once again sat on the sidelines with attention very much elsewhere.
What to watch for in the short-term?
↓ The Bank of England meeting this Thursday is unlikely to upset the pound that much with those in markets expecting a 6-3 vote by the Monetary Policy Committee to hold rates at 5.25%.
This meeting will also see updated economic forecasts from the Bank of England as well as a press conference to explain their decision. We are looking for further downgrades of both the inflation and growth outlook in the UK.
What about the coming months? ↓ Recession warnings in the UK are nothing new and despite a recession being unlikely to strengthen the pound, should we see USD weaken in the coming months, we could see a return in GBPUSD towards 1.25.
Calendar
Thursday 12.00 GMT | Bank of England meeting
US Dollar
What happened last week?
↓ The dollar remained strong as it heads into a very interesting data week.
What to watch for in the short-term?
↓ The wider risk aversion in global markets has not miraculously disappeared in the past week and, as such, nor has the USD strength.
This week sees a Fed meeting and the latest numbers from the US jobs market. The former should be a bit of a fait accompli although there is the risk that tighter monetary conditions are hinted at and higher rate expectations are priced out of the market, weakening the USD. Likewise the jobs numbers are likely to be strong but a shock decline is always possible.
What about the coming months? ↑ As we hinted at last week, data dependence is crucial for central bankers but the dollar will move higher if growth differentials are shown to be widening in the US’s favour into 2024.
Calendar
Friday 12.30 GMT | US Payrolls Report
Euro
What happened last week?
↓ The ECB meeting suggested that should data show softer inflation, then the ECB’s hiking cycle is over.
What to watch for in the short-term?
↑ As noted above, data from the Eurozone is likely to show little more optimism than weaker inflation but stagnant growth. Both pieces of information should allow for the ECB to move into hibernation mood, although risks around government fiscal deficits remain.
In the short term, like the pound, the euro needs a weaker USD to excel.
What about the coming months? ↑ 2024 is a year of elections in the Eurozone so canny euro watchers will be keeping an eye on spending promises from political parties.
Calendar
Tuesday 19.00 GMT | Eurozone growth
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