Daily Spectrum FX Report

GBP: The British Pound drew support from the fact that Bank of England policymakers have been trying to push back against market expectations for early interest rate cuts. Market participants now look to the release of the final UK Manufacturing PMI, which, along with a scheduled speech by the BoE Chief Economist Huw Pill, could provide some impetus.

EUR: The Euro was on the back foot yesterday as data showed that Eurozone inflation declined further last month, triggering speculation for the ECB to start lowering interest rates from record highs later this year. Looking ahead, market players will keep an eye on the Eurozone Harmonized Index of Consumer Prices due today, along with Manufacturing PMI from Italy, France, and Germany.

USD: The U.S. Dollar lost some ground against major peers as yesterday’s data showed that annual inflation in January was the lowest in three years. Markets now anticipate the Fed to begin cutting interest rates by summer. Nonetheless, the timing of the easing policy is uncertain as inflation could be more stubborn than expected and it could convince the Fed to keep rates higher for longer.

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