Busy End To The Month With Both Eu Us In Focus

GBP v USD has seen just a 2% swing in February so far, with GBP v EUR seeing a meager 1%..

GBP

At the time of writing, Sterling is unchanged against the majors when compared to where things were at the start of the month. It has been a month of overall little volatility and small market swings (so far). Things heat up this week, but without any major input from the UK, so the £ will play the 'sitting duck role'.

To be fair, it has been a month of disappointment for most forecasters who fully expected to hear of central banks' plans to cut interest rates. Money markets have been consistently wrong in their assessment of when this would start, which has led to traders to take stock and adopt a 'wait-and-see' approach for now.

This has meant the Pound has consolidated its position in the market, which remains favourable against the majority of currencies (especially the Euro). It's a 50-50 outlook both this week and short term, so a 'stick or twist' moment for many Sterling sellers..

EUR
There is plenty due out of the Euro-Zone this week to keep the Euro busy. Confidence figures are always important as herd mentality matters and that arrives from both France & Germany tomorrow. Following that, we have a flurry of German related data which will be watched closely.

Inflation numbers are the main event this week and economists are expecting to see both Germany and the Euro-Zone publish below 3%. This would be Euro negative, but any upside would be positive for the single currency.

USD
A key component to the week for those with an interest in £-$, is whether or not we will see an influx of investors re-balancing their portfolios. At the end of each month and quarter, profit-taking and the opening and closing of positions occurs. We are talking huge figures that impact the FX market and because of the recent strong US stock market performance, we may see a USD slip if investors re-balance.

Elsewhere, PPI & GDP are important releases which means we have an intriguing end to the month for the US/USD..

By Dan Waterman on February 26, 2024