Sterling has held firm against a broadly weaker euro this morning whilst a public holiday in the United States and a lack of UK data is expected to keep ranges relatively tight.
Pound Sterling – UK Markets
Sterling stayed firm versus a struggling euro this morning as worries over Greece's debts outweighed other concerns about the UK economy. At 0939 the pound traded at 1.1508 versus the single currency.
This week's focus will be on BoE minutes, due on Wednesday. Last week this meeting put pressure on the pound when BoE Governor Mervyn King said it was far too soon to say QE was finished.
January inflation data is scheduled for release on Tuesday, with CPI expected to fall 0% month-on-month according to analysts.
US Dollar – US Markets
It could be another strong week for the dollar which ended last Friday looking bullish against the majors. A bank holiday in the US today likely means that any movements will be determined by news elsewhere and at 1030 GMT the greenback traded at 1.568 against sterling.
Persistent euro-zone deficit worries could give the dollar a significant boost against the euro. Further tightening of Chinese monetary policy is predicted to slow down the global economic recovery which will likely drive investors to the safe-haven US currency.
The release of meeting minutes from the most recent Federal Reserve meeting, as well as a housing starts report are two events predicted to give the greenback a boost this week. As for today, the dollar has yet to make any major moves against its counterparts and traders may be wise to wait and see where the market is heading before doing so.
Euro – European Markets
After last weeks ECB meeting investors were cautious due to the lack of a plan to assist Greece in combating its debts. Consequently, the euro plunged near a 9-month low against the dollar. This pessimistic sentiment could well continue this week, as it is becoming clear that there is no clear strategy to aid Greece.
Today investors seem to be going short on the single currency as it does not appear that any good news is on the horizon. Currently EUR/USD is trading around the 1.3591 level, not far from the near record lows reached last week. Fresh concerns over Spain and Portugal's debts will likely do nothing to aid the ailing currency this week.
Other Currencies – Highlights
The yen fell this morning after a Cabinet Office report showed Japan’s gross domestic product deflator dropped 3% in the fourth quarter from a year earlier. Japan’s economy expanded at an annual pace of 4.6% in the fourth quarter. The Bank of Japan will start a two-day policy meeting on Feb 17th.
UK PM May Stands Her Ground in Brexit Talks, Pound Sterling Weakens
Retail Sales Boost Pound Sterling while Brexit Headlines Limit Gains
Brexit Headlines Cause Wild Swings in Pound Sterling