Spectrum FX Daily Report

GBP: The British Pound rallied against the dollar and the euro yesterday after a survey showed that UK business activity outpaced that of major European economies, further fuelling the case for British rates to stay higher for longer. On that note, the BoE meets next week to discuss monetary policy. The expectation baked into markets right now is for UK rates to start to decline in June, with little chance of a drop before then.

EUR: The Euro was on the back foot as market participants await the European Central Bank's meeting later today. The ECB?is expected to hold interest rates at their current record high. However, ECB President Lagarde signalled in Davos that the first cut may come in the summer months of 2024. She stated that she remained reserved and data-dependent in her final outlook. Nevertheless, the market has priced in a 60% odd of the first-rate cut as early as April, according to Reuters.

USD: The U.S. Dollar was last seen sitting close to a one-week low amid increased uncertainty before a barrage of signals on the U.S. economy. Fourth-quarter gross domestic product data due later today is expected to show some cooling in growth. However, the U.S. economy is still expected to remain well ahead of its developed world peers.

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