Market Update 16th January – 20th January

Where you will be able to keep up to date with all the latest changes in the currency market

GBP

The pound has continued its slow start to the year dropping another 1.5% against the EUR to lows we haven’t seen since the end of September. However, despite GBP weakness we still saw the pound rise 1% against the Dollar last week.This week we have Unemployment data for the UK being released, should the results show a drop in the unemployment then this could be positive for the Pound and could indicate future interest rate rises, but could we see a rise this will further indicate a shrinking economy and this could be seen as bearish for the Pound.. We also have CPI data being released this week, this is going to measure the inflation levels in the UK, usually a rise in inflation could push the BoE to raise Interest rates, so should we see a rise in inflation levels then this could be seen as positive for the pound. But should we see a drop in the inflation levels then this could negatively affect GBP quotes against its competitors. 

EUR

The Euro has been the best performing major currency so far this year, last week that performance did not stop when we saw the Euro strengthen 1.5% against the GBP and 2% against the USD, this is because last week’s data saw the Eurozone holding off recession. This week we have HICP data in Germany being released, Germany is the Eurozone’s biggest economy so this will give us a good indication of  the data for the whole eurozone. The Eurozone is going to be monitored closely for this first quarter as negative growth in the eurozone is expected as early as Q1 of this year, data from the UK and USA will also affect the already volatile Euro. 

USD

The Dollar was on the back foot all of last week when we saw it drop 1% against both the GBP and the EUR, the main reason being the CPI data we had last week saw inflation levels drop from 6% to 5.7%, this was negative for the USD because the last interest rate decision we had from the Fed was already smaller than hoped, if the inflation levels are dropping with a smaller interest rate hike, then this could lead to even an even smaller rate hike on their next interest rate decision. This week we have retail sales figures being released for Dec 2022, this will indicate the US Christmas spending figures, should we see a rise as expected then this could be bullish for the USD, but should we see a drop or lower than expected results then this could have a negative effect on the USD.