Daily Analysis: Market Tunes Into US Data

Our daily analysis of EUR, GBP and USD.

USD

• GBP/USD holds steady this morning above 1.2860 after declining from last week’s 12 month high.
• With the Fed’s preferred measure of inflation to come at 1.30pm in Core PCE GBP/USD traders will be wary of any deviation from the forecasted drop from 2.6% to 2.5%.
• We could continue the volatility seen in recent weeks today as the market hedges its bets on when the Fed will cut rates ahead of Wednesday’s interest rate decision.

EUR

• German retail sales, CPI and GDP as well as Eurozone GDP make up the high-impact data for the start of next week.
• The major movement could however come from the Fed and BoE interest rate decisions mid-week and the accompanying statements that follow them.
• GBP/EUR holds above 1.1850, finding comfort in trading in the range between 1.1820-1.1920.

GBP

• Sterling lost ground this week following the recent 12-month highs against its G3 counterparts.
• Analysts are now pricing in an over 50% chance of a 25bp cut in interest rates this coming Thursday from the BoE.
• Aside from the monetary policy committee’s meeting, next week data is fairly light and the key driver for market movement will come from EU data and further sentiment from the G3’s central banks.

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