Concerns have been raised in the last few months on how the UK economy is underperforming – which has been noticed on markets with GBP not performing as well as in the first half of 2024. This morning, we could see a glimpse of hope with UK BRC retail sales monitor indicating improving sales numbers in January. Even if the weather was very poor in January, it did not hold back consumers from spending. Non-food and in-store non-food sales were the best performers, showing growth in sales. This did not reflect on the markets, as Tuesday’s opening seeing GBP in negative territory to both the EUR and USD.
Can we see a reaction later in the day for GBP? Well, around midday Bank of England governor Andrew Bailey will speak. If Mr Bailey would give us an indication of what path BoE is prepared to take moving forward, i.e. the number of interest rate cuts they’re planning on doing in 2025 – we could see movement on GBP-pairs depending on the tone of direction.
Recent market volatility has been overshadowed of Trump’s tariff talks. The latest of a 25% tariff on steel and aluminium has been brushed off slightly. EUR and CAD have rebounded against the USD, with markets forecasting that there is a difference of what Donald Trump is saying he will do, compared to what he later on will implement. Last week he did say that tariffs of 25% would be placed on all Mexican and Canadian imports and to later change his plans and focus on individual industries.
In the afternoon session, 3pm to be exact, Federal Reserve chair Jerome Powell to hold a testimony. Could we see any signs from Mr Powell discussing the recent economic development, inflation levels or upcoming interest rate decisions.
GBP/EUR 1.1977 GBP/USD 1.2355 GBP/AED 4.5420
GBP/AUD 1.9681 GBP/CHF 1.1265 GBP/CAD 1.7716
GBP/NZD 2.1883 EUR/USD 1.0304 GBP/ZAR 22.8420