TODAY’s RATES & MARKET NEWS

Key Headline:

·       Trump indicates plans for tariffs.

·       EUR jumps as markets scale back rate cut expectations.

·       Trump targets Colombia

Recap

The EUR enjoyed its strongest week in over a year, buoyed by a reduction in ECB rate cut expectations after January's economic activity outperformed forecasts and as concerns over Donald Trump’s tariff risks appeared to ease.

The upward momentum in the EURUSD pair is being seen as a correction following the sharp decline observed over the past four months.

Meanwhile, the GBP had a solid day, supported by better-than-expected PMI figures. The weakness in US PMI data gave markets further reason to sell off the USD.

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Today’s Rates

Today's Interbank Rates at 09:57 am against GBP movement.

GBP>EUR – 1.1901

GBP>USD – 1.2488

EUR>GBP – 0.8402

EUR>USD – 1.0491

GBP>CAD – 1.7937

GBP>AUD – 1.9839

GBP>SEK – 13.659

GBP>AED – 4.5882

GBP>HKD – 9.7313

GBP>ZAR – 23.80

GBP>CHF – 1.1255

GBP>PLN – 5.0207

Today’s Key Takeaways

·       The USD is climbing this morning after President Trump’s weekend announcement of a potential 25% tariff on Colombian imports. However, he has since withdrawn the threat after Colombia agreed to repatriate undocumented migrants. This episode highlights Trump’s unpredictability, and while the USD appears to be on a corrective path, any renewed focus on trade tariffs could strengthen the currency further.

·       This week, attention will turn to the Fed and ECB rate decisions. The ECB, in particular, carries the potential for a hawkish twist. While markets have fully priced in a 25bp rate cut, any mention of inflationary risks or signs of shifting economic sentiment in the bloc could see expectations for further cuts pared back, likely bolstering the EUR.

·       On Wednesday, the Fed is expected to hold firm against Trump’s recent calls for rate cuts. With strong economic performance and the potential inflationary effects of his fiscal policies, no changes to interest rates are anticipated in this meeting.

·       Later in the week, Q4 US GDP figures, due Thursday, are forecasted to show a slight slowdown, with growth expected at 2.6%, down from 3.1% previously. On Friday, core PCE inflation data is expected to indicate a rise, from 0.1% in November to 0.2% in December, reflecting modest inflationary pressures.



16th January 2025

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