The Weekly Market Update
News & Insights
w/c 6th February: Policy Reset
GBP
The British Pound is holding its ground as attention turns to the Bank of England this week. Many in the market expect policy to remain unchanged, but investors will be listening closely for clues on the path ahead as a weakening jobs market contrasts with firmer business activity since the November Budget. With unemployment at its highest level for several years, markets see scope for a cut later in the year, even if the Bank stays cautious for now.
EUR
The Euro faces an important week as the ECB meets for the first time this year. No policy change is expected, but the strength of the currency and falling inflation are emerging concerns. With inflation dipping below target and forecasts pointing lower, any emphasis on downside risks could fuel expectations of a rate cut later in the spring, despite recent resilience in Eurozone growth.
USD
The U.S. Dollar remains firm after markets reassessed the US policy outlook following the nomination of Kevin Warsh as the next Federal Reserve chair. The appointment has reduced near-term uncertainty and supported the currency. Attention now shifts to a heavy run of US data this week, including business surveys and Friday’s jobs report, which will shape expectations for the months ahead.
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