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Traders expecting a period of consolidation for GBP

UK jobs data & EU GDP the main focus this week..



Well we wasn't wrong in assuming there was more to come from Sterling last week, after gaining an unexpected 1% the week before. Mixed economic data and another BoE interest rate hike propelled the Pound to multi-month highs across the board.

But a mixture of stocks weakening and traders cashing-in on their profit £ positions on Friday, saw a mini sell-off of GBP. Cable is trading at a 2-week low (but remains buoyant) and the £-€ rate is expecting a consolidation period. That though, is dependent on the key events for this week which occur tomorrow..

The ECB this morning reaffirmed the lagging impact of rate hikes and expect much of the action to appear on paper in 2024. They also updated their GDP & inflation forecasts for this and next year by between 0.1%-0.2% in all areas. 

The single currency lost some ground across the board last week after offering no economic data to the market. This week, the only market mover of note are the GDP numbers and could represent a little bump on release if the small increase as forecast arrives. 

Things took a turn for the better last week for the Dollar after a period of pressure, induced by the banking fallout. Over 1% was reclaimed and we will find out this week if that was just a bump in the road or the beginning of a recovery period. With the major data coming from elsewhere this week, the USD will be moved by events out of its control.