Weekly Round-Up & The Week Ahead

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

DAILY ANALYSIS

USD

Last week the Dollar found support with stronger-than-expected GDP results released at 3.8% compared to the forecasted 3.3%, while Core PCE registered at 2.9%, reinforcing the narrative of sticky inflation and mixed Fed commentary, keeping markets divided. Although Powell struck a neutral tone by stating Monetary policy is “in a good place”, other Fed officials provided the market with mixed signals, leaving investors with a divided policy outlook, keeping them cautious and the Greenbacks price action broad.

The Dollar sees a relatively subdued week ahead, saving the majority of its economic announcements to be released at the end of the week, with the market looking forward to Nonfarm Payrolls and ISM Services PMI, in which any deviations away from their predicted figures could create volatility for the Greenback.

EUR/USD trades below 1.1720 at the open this morning.

EUR

The Euro traded quietly through last week with limited economic catalysts until Tuesdays Manufacturing and Services PMIs came out, diverging away from their predicted figures left the market wondering whether the ECB will counter the Feds Dovish Tone, as stronger services prints hinted at underlying resilience whilst a softer manufacturing release underscored ongoing fragility, creating speculation that ECB policymakers are struggling to strike a balance between supporting growth and maintaining a firm stance to keep inflation in check.

This week our attention turns to the Inflation data (Core HICP) being released midweek, with analysts expecting a slight uptick from 2% to 2.3%, signifying that the ECB policymakers have current Monetary Policy under control, with the market tapping into
President Lagardes speech later this week, seeking a supportive tone to back the Euro.

GBP/EUR trades at 1.1465 at the open this morning, reflecting steady sentiment but leaving scope for volatility should Eurozone inflation data surprise.

GBP

The Pound provided the market with little confidence from its major economic data announcements, with Manufacturing and Services PMIs being released softer-than-expected, leaving analysts wondering whether the BoE will fire back to strengthen the UK economy.

There are few announcements regarding the Pound this week, with GDP being released tomorrow morning, expected to remain at its previous levels. However, any deviation away from this predicted figure could place additional pressure on the BoE to cut interest rates further.

GBP/USD trades at 1.3445 at the open this morning, with traders remaining cautious until the BoE provides clear insight into the UKs economic trajectory.

Daily Rates

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