The poor UK GDP growth and worries over flatlining economic circumstances will have a significant impact on the British pound’s volatility this week. Both the GBP/EUR and GBP/USD have declined following the selloff last week. The PMI, labour market report, CPI, and Bank of England interest rate announcement are among the key pieces of data that will impact the pound this week. Strong outcomes could help stabilise Sterling, while disappointing data could result in additional rate cuts and further pressure on the currency.
The December flash PMIs for France, Germany, and the eurozone are predicted to continue to decline, posing a downside risk to the euro today. Political unpredictability in Germany, where Chancellor Scholz’s administration is up against a no-confidence vote, could, nevertheless, result in fiscal stimulus that would help the Euro in 2025. Going forward, if ECB speakers—especially hawkish officials—push back against predictions for lower rates, they could have an impact on the Euro.
Due to favourable inflation and PPI data—inflation hit a four-month high last week—the U.S. dollar appreciated. The greenback held steady despite the week’s quiet conclusion and the lack of noteworthy data on Friday. The Federal Reserve’s next interest rate decision is anticipated to be a major factor going forward, and any unforeseen policy changes might cause the dollar to fluctuate significantly.
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