Optimism Grows
GBP: The British Pound strengthened to recent highs following positive domestic data and a broader improvement in global risk appetite. British PMI data showed the manufacturing sectors output improving and a corresponding improvement in business optimism in the UK. Alongside this, the rise in global equities and the corresponding rise in the Pound demonstrates the increase in the global risk appetite and the prevailing of cooler heads.
EUR: The Euro traded quietly as investors weighed mixed data. German retail sales edged into growth in December, beating expectations but underscoring weak consumer demand. Eurozone manufacturing contracted for a fifth straight month in January, limiting upside. Attention now turns to upcoming inflation figures, expected to show cooling price pressures below the central bank’s target, which could weigh further on sentiment in the near term.
USD: The US Dollar steadied at the start of the week after failing to extend a strong Friday rebound. Support came from expectations that Kevin Warsh’s nomination as Federal Reserve chair would preserve policy independence, but gains faded as markets continued to price in interest rate cuts. Attention now turns to upcoming US jobs data, where softer readings could renew selling pressure later this week ahead.
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