Sterling begins the week weaker than both the euro and US dollar compared to this time 7 days ago. Overall, GBP/EUR is at a two-year low for the first time since its long vaccine-related boost in 2021. Against the dollar, the pound sits close to its weakest level since January 6th, as investors rushed to dollar for safe-haven buying following a better-than-expected US jobs report.
The pound fell under pressure last week for a mixture of reasons including worries over a dovish-sounding Bank of England, in comparison to the ECB and the US Federal Reserve. On Thursday, the BoE delivered its 10th consecutive interest rate hike, raising Bank Rate by 50 bps to 4%.
There are lots of key data releases market watchers will be looking out for over the course of the week. Investors will be watching closely for the latest eurozone retail sales data, Spain’s consumer confidence, Canada’s balance of trade plus several speeches from the Federal Reserve and much more. A key release on Thursday will be the UK’s latest GDP data.
We’ve just seen the latest factory orders data for Germany which revealed a 3.2% rise month-over-month in December. This beat market forecasts of 2%, pointing to a reverse from a downwardly revised 4.4% fall in the prior month. The upturn was largely supported by rises in domestic and foreign demand.
In the US stock markets, the dollar index remains strong this morning after jumping more than 1% in the previous session. This was largely due to stronger-than-expected jobs data which suggested the Fed now has more room to hike interest rates. The US economy added some 517,000 jobs in January, the highest number since July and well above market expectations of 185,000.
The Japanese yen weakened against the US dollar this morning, hovering at its lowest levels in over three weeks. This follows reports that the Japanese government is likely to appoint Bank of Japan Deputy Governor Masayoshi Amamiya as central bank head – Amamiya is considered the most dovish among the potential candidates.
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