At the close of last week, the British Pound was consolidating some of its recent gains as it traded in a narrow range. Nevertheless, it appears that there won’t be much more upside movement, as some analysts have warned that the currency might have recently reached an overprice. For the time being, the Pound might keep moving sideways while GBP investors wait for important UK data later this week.
As market players processed the ECB’s recent interest rate cut and the disappointing Eurozone industrial production data, the Euro moved in a mixed manner on Friday. Nonetheless, the euro’s inverse relationship with a declining US dollar served to support it. Looking ahead to this week, investors in the EUR will be concentrating on Germany’s most recent ZEW economic confidence index.
As the markets prepared for what is expected to be an interest rate cut this week, the U.S. Dollar continued its recent downward trend this morning. In actuality, rates are likely to be lowered by the Fed at the end of its policy meeting on Wednesday, though opinions on the extent of the rate reduction vary between markets. A 50% likelihood of a 50 basis point cut and a 50% risk of a 25 bps cut are factored in by investors.
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