Market Report - 23/01/2024
Busy week ahead for the Euro ; Market awaits US GDP release
We have a very busy week in the economic calendar for all major currency pairs and more specifically for the GBPEUR pair, kicking off today:
At 3pm we have the EU Flash consumer confidence index; this should provide some important and interesting insight on the level of confidence from consumers across Europe. This index is usually a good indicator for just how strong the economy is, with a high level of confidence representing a strong and robust economic outlook.
Tomorrow, we have multiple releases of PMI data coming out of Europe (EU bloc and Germany) the UK and the US. The last few readings have disappointed, with numbers firmly below 50 indicating contraction (opposed to growth). Despite the fact it seems unlikely that all 3 economic areas will release results over 50, a positive increase from last month’s readings or any surprises above forecasts will be deemed pleasant surprises and could cause some volatility for the currencies involved.
On Thursday we have the main event, with the ECB interest rate decision; This is eagerly anticipated by the markets with the December’s inflation reading outlining an increase of 0.5% (from November’s 2.4% reding). Christine Lagarde among several other members of the ECB have suggested earlier this week that they do not expect to cut rates until the summer, at least, however investors believe there is an 80% chance that a cut will arrive earlier, in April.
We also have the IFO business sentiment release at 7:45am in France, German business sentiment index released at 9am and most importantly the GDP release for the USA in the afternoon at 1:30pm. This will give insight to the health of the American economy and should act as a pre cursor or guide for the Federal Reserve’s interest rate path (next decision is 31st January).
On GBPEUR we have been trading between the mid 1.16’s to 1.17, which when taking in account the last 52 week range is certainly in the higher end (1.1133-1.1778). Meanwhile GBPUSD is trading in a range slightly above 1.27 to the mid 1.27’s.
This week could create some opportunity for volatility across all major pairs, so If you have any questions please do feel free to get in touch