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Market Update

• Posted by currencies in Sterling, UK, Uncategorised
• January 23, 2024
• No Comments

Starting off this week, Monday did not have much to contribute in terms of economic data. Instead we could read reports of concerns from colleagues within the European Central Bank of Christine Lagarde’s leadership. Seeing the voting of confidence being below her pre assessor’s Mario Draghi and Jean-Claude Trichet – leading to EUR losses against both the GBP and USD. Lagarde only coming into half of her eight year term in charge. Not the focus ECB want right now – being under pressure already of finding the right balance of stabilising inflation levels while not decreasing economic growth too much. ECB meet again on Thursday for their next interest rate decision. With no changes on their monetary policy yet it will be interesting to see comments from members regarding internal disagreements. Since the market start of 2024, EUR is the underperformer versus both the GBP and USD.
 
Investors risk appetite continues to grow and the S&P 500 set a new record high at close on Monday, seeing the USD fall off slightly against GBP and EUR. For USD pairs, focus is now on Thursday and GDP (economic growth figures) that is expected to cool off a little, in other words a slowdown in economic activity. Markets are currently battling a transition of moving from a risk-off scenario where safe-haven currencies took advantage while interest rates were high. Moving forward and central banks planning to start cut interest rates, we will move more towards a risk-on scenario when investors search for riskier assets to achieve good returns. This could lead to momentum for both the GBP and EUR against the USD.