Pound Sterling starts 2024 in the mid-1.15’s against the EUR and mid-1.27’s against the USD, with the main focus this month centered around inflation releases for Europe, United States & The United Kingdom. The markets have prior to Christmas, been fully pricing in Interest Rate cuts for at some point between March & May. Any further sign of inflation naturally slowing down in December will only strengthen this position and could potentially see the base currency in question, weaken against its counterparts.
For this week, there’s inflation releases from France & Germany on Thursday which will no doubt paint a picture for Euro-Zone’s own inflation release on Friday. Current projections seem to suggest a small drop in December by 0.2% so some Euro weakness later this week is certainly a possibility. We also have 2 important economic releases out of The U.S, first up is the FOMC Minutes from their last meeting which will no doubt further solidify the intentions to cut Interest Rates at the very latest in May, but potentially in March. Inflation dependant.
We then round the week off with the hugely volatile Non-Farm Payroll release. As it stands, the numbers suggest a drop in the number of jobs created in December, also potentially coinciding with the unemployment rate edging up slightly. If this was to play out as suggested then it could also be expected to see the USD weaken against other major currencies. It could of course come out completely the other way and then we would see USD strength, but either way we would expect markets to be slightly volatile in the lead up to this release.