By Noam Bennaiche
On Friday afternoon, US inflation came in at 2.4% year-on-year, slightly below expectations of 2.5% and unchanged from the previous reading of 2.4%. On a monthly basis, inflation rose by 0.2%, down from 0.3% previously and below forecasts for it to remain steady. While the data showed a marginal easing, inflationary pressures persist.
GBP/EUR went up 0.3% last Friday and is now testing the 1.15 level at the startof this week. Against the US dollar, sterling traded in a volatile range throughout the week, reflecting mixed market signals.
Today’s economic calendar is relatively light. This morning, the Rightmove House Price Index printed at 0%, down sharply from the previous 2.8% reading. In the eurozone, industrial production is expected to come in at -1.5%, compared with 0.7% previously, which is unlikely to offer significant support to the euro against sterling. Market focus is now shifting to Tuesday’s employment report and Wednesday’s CPI release. Signs of weakening labour demand and slower wage growth could strengthen expectations of a near-term interest rate cut from the Bank of England.
Looking ahead, the key releases this week include Germany’s final CPI on Tuesday, UK inflation on Wednesday, and UK monthly retail sales on Friday. We will also be monitoring a series of data releases from Europe on Friday morning, followed by several important US figures later in the afternoon. UK inflation data, along with the FOMC minutes, are likely to influence USD demand and provide fresh direction for the major currency pairs.
Please stay in touch with your currency consultant to discuss how these market developments could impact your exchange requirements and to ensure you make the most of your transfers.
Tuesday
GBP — UK Unemployment Rate at 07:00 GMT
GBP — UK Average Earnings Index + Bonuses (Dec) at 07:00 GMT
GBP — UK Claimant Count Change (Jan) at 07:00 GMT
EUR — German CPI YoY (Jan, final) at 07:00 GMT
Wednesday
GBP — UK CPI YoY (Jan) at 07:00 GMT
GBP — UK Core CPI YoY (Jan) at 07:00 GMT
USD — Federal Open Market Committee (FOMC) Minutes at 19:00 GMT
Thursday
USD — Unemployment Claims at 13:30 GMT
Friday
GBP — Retail Sales (MoM) at 07:00 GMT
USD — Flash Manufacturing PMI at 14:45 GMT