The US Dollar has stabilized this morning ahead of more crucial Inflation data which is set to be released later this afternoon. U.S Consumer Prices yesterday came in at 2.6% year-on-year which was marginally below expectations, but with the figures having climbed by 0.2% this is seen to have given the Federal Reserve more room to reduce their interest rates.
This afternoon we have the producer inflation release, alongside November’s Retail Sales figures. Producer Inflation should mirror yesterday’s figures which would only go further to cementing the possibility of further interest rate cuts as we move into 2026, albeit dependant on how much prices have risen by. Keeping the Dollar steady was also a public showing of support from Central Bank officials after Trump had threatened criminal charges which had brought into question the independence of the Federal Reserve.
Moving our focus to Europe, Greenland still very much remains a focus ahead of talks between officials in The U.S, Denmark and Greenland. So far, markets have been fairly unmoved but further developments surrounding military involvement and a potential conflict with neighbouring NATO members could bring uncertainty for The Euro.
Elsewhere, The Japanese Yen has reached it’s lowest level against the US Dollar for nearly 18 months as it looks increasingly likely that Japan’s Prime Minister Sanae Takaichi is preparing for a potential snap-election on the 8th February. Investors focus recently has been on Takaichi’s pledges to expand fiscal policies which would potentially increase government debt and therefore delay increasing interest rates to combat their high inflation rates. All in all, this would lead to further volatility for The Japanese yen.
GBP/EUR 1.1533 GBP/USD 1.3438 GBP/AED 4.9381
GBP/AUD 2.0116 GBP/CHF 1.0759 GBP/CAD 1.8657
GBP/NZD 2.3414 EUR/USD 1.1636 GBP/ZAR 22.0558