Key Headline:

• GBP Gains Momentum: Softer-than-expected UK CPI figures provided a boost to GBP, pushing it higher across the board.
• USD Weakens Further: Reports of a gradual approach to tariff implementation continue to weigh on USD, extending its recent decline.

Recap

The USD extended its decline during yesterday's European session, driven by weaker PPI data and reports from Trump’s economic team indicating a potential shift toward a phased tariff implementation, contradicting earlier rhetoric. Meanwhile, GBP faced continued selling pressure ahead of today’s CPI release, though the UK gilts market showed signs of stabilising after last week’s turmoil.

Today’s Rates

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

GBP>EUR – 1.1851

GBP>USD – 1.2221

EUR>GBP – 0.8438

EUR>USD – 1.0308

GBP>CAD – 1.7532

GBP>AUD – 1.9688

GBP>SEK – 13.624

GBP>AED – 4.4875

GBP>HKD – 9.5130

GBP>ZAR – 23.032

GBP>CHF – 1.1141

GBP>PLN – 5.0492

Today’s Key Takeaways

• GBP Relief Rally: GBP is climbing this morning following lower-than-expected CPI figures, which have eased concerns over the UK economy. While the numbers increase the likelihood of two Bank of England rate cuts this year (normally GBP-negative), they are reducing gilt yield risk premiums and supporting GBP for now.
• Upcoming UK GDP Data: Focus shifts to tomorrow’s GDP numbers for November. Retail sector challenges loom large, with reports indicating many UK retailers plan to raise prices, cut staff hours, or reduce headcount in response to higher taxes from the recent budget, signalling potential long-term pressures on GBP.
• US CPI in Focus: Markets await US CPI data this afternoon. A softer number could lead to profit-taking on USD gains and further recovery for GBPUSD and EURUSD. Conversely, a higher print would likely reinforce USD strength.

15th January 2025

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