Weekly Round-Up & The Week Ahead

Weekly round-up and a look at the week ahead for EUR, GBP, and USD.

USD

Last week we saw a mixed bag of data driven results with positive USD CPI data on Wednesday followed by poor Retail Sales dropping 0.9% in January on Friday, allowing GBPUSD to rise to its highest level all year to 1.2627, currently retracing back below the 1.2600 resistant level. Markets take stock on the news that Trump continues to pledge reciprocal tariff on the US trading partners globally on a country-by-country basis with the first round of Tariffs due to come into effect in April. However, the president's rhetoric has somewhat softened with the idea of fairness, highlighting that whichever country charges the US, the US will charge them in return.

Today, is President's day in the US, a bank holiday, so there will be no same day transfers on the dollar. The week ahead will have a range of data releases with all roads leading to Manufacturing and Services PMI due out on Friday.

EUR

Inflation in the Eurozone remains an ongoing concern with the European Central Bank continually revising and implementing monetary policy changes in the hope of stimulating economic activity. The US position on Tariffs with the EU continues to gain pace with Scholz highlighting its willingness to discuss reciprocal tariffs and reiterates that the EU is a unified economy. The ongoing peace agreement for stopping the war between Russia and Ukraine and the concern that the President Zelenskiy has been left out of the room of negotiations is shaping global opinion on the peace agreements validity. Europe will need to show their commitment and provide some sort of involvement in the negotiation as well as providing ongoing assistance on the monitoring and peace keeping missions throughout the region after its all said and done.

From a data perspective, the EU will also release French, German PMI figures on Friday highlighting the economic health of the bloc and whether this will mean additional monetary policy changes.

GBP

Last week the UK enjoyed better than expected GDP data, providing some support to the Pound Sterling. The UK economy also grew 0.1% quarter on quarter beating expectations. Investors are bracing for UK labour market data and CPI inflation data which is due out this week, being published on Tuesday and Wednesday, this report should provide some guidance as to the Inflationary issues still hovering over the UK, but also whether the Bank of England will look to cut Interest Rates again in the March meeting.

A recent survey also suggests that more firms are planning job cuts in the next quarter with the labour outlook painting a bleak picture for consumers in response to the government's tax hikes due in spring, the survey included 2000 employers looking to cut jobs as the looming employee cost begin to rise with higher payroll taxes and a 6.7 per cent increase in the minimum wage.

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