Data releases are very thin on the ground today, with markets looking more towards the Bank of England interest rate decision on Thursday at midday for some guidance in GBP trading. We currently sit just below a 50% chance of an interest rate decrease coming from the MPC meeting, meaning there is still a very real risk to the downside for sterling should the week ahead go badly.
On Friday, the manufacturing and services data was released with better than expected figures, giving GBPUSD a brief shot towards the 1.3180 mark before falling back down to previous levels. A positive reading has, so far, assisted with bringing the percentage chance of the interest rate decision lower.
Elsewhere in GBP news, Boris Johnson is today meeting with European Commission President, Ursula con der Leyen, to set out the groundwork on the UK’s future relationship with the EU. Over the weekend, Brussels has warned the UK on using the proposed trade deal with the US as leverage in trade negotiations after 31st January. Markets will be hoping for a positive outcome from today, to give some guidance on how the transition period is going to play out.
EURUSD posted the longest negative streak last week since November 2018. Today, the main data release from Germany is the IFO Expectation Index, which is expected to show more positivity in the largest European economy. This should, therefore, give the Euro a boost to see the week’s trend reversed.
Have a great day,
Author: Jack Nicholls, Relationship Manager
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