The pound begins the week stronger against the euro, maintaining last week’s unexpected gains. Against the US dollar, sterling is also stronger than it was compared to this time last Monday.
Markets anticipate the UK’s manufacturing purchasing managers’ index data, as well as CBI’s business optimism index and distributive trades between now and Friday. All of which could shift sterling’s position against its rivals.
Sterling was the outperformer against its rivals last week but the question is whether this new found strength will be long or short-lived. See what leading banks are predicting for the next quarter and beyond in our brand-new Quarterly Forecast, which is free to download.
In the latest cost of living news, it is reported that UK banks are being asked to extend support offered to customers during the Covid 19 pandemic, as the cost-of-living crisis weighs heavy on vulnerable customers.
After gaining traction against the US, touching its highest level since mid-April, the euro retreated modestly in the early European morning. This follows comments from European Central Bank (ECB) Governing Council member Olli Rehn, warning of “significant interest rate increases” from the ECB for the first half of 2023. The comments were made over the weekend.
On the data front, flash PMI data for January will be published for the Euro Area this week. It will also be published for other countries over the course of this week, including the US, UK and Japan. Investors will also be keeping a close eye on Germany’s IFO business climate which will be released on Wednesday.
The dollar index (DXY) slid to its lowest levels in almost eight months this morning following weakening US economic data and more ‘dovish’ comments from Federal Reserve officials. Latest data revealed that US home sales plunged to a 12-year low in December, while the fed suggest less aggressive money tightening policy ahead.
On the other hand, the outlook for US stock markets was a positive one at the end of last week. On Friday, the Dow added more than 300 points while the S&P 500 and the Nasdaq 100 were up roughly 1.9% and 2.7%, respectively. This was backed by rallies in tech and other high-growth stocks, Including Meta, Amazon, Microsoft, Tesla and Netflix.
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