Key Headline:

• Market sentiment shifts dovish on rate expectations following comments from Waller.
• UK retail sales data highlights ongoing struggles in the economy, underlining weak consumer confidence.

Recap

The USD weakened broadly yesterday following remarks from Fed member Waller, who indicated support for lowering interest rates in early 2025, potentially beginning in March, if inflation continues to decline. Markets are already pricing in 44bps of cuts, with Waller hinting at the possibility of three to four rate reductions this year, depending on economic data. Meanwhile, retail sales data had a mixed impact, providing little influence on market movements. Earlier, Bank of Japan officials suggested an interest rate hike in their upcoming meeting, provided there are no disruptions linked to Donald Trump's presidency.

Today’s Rates

Today's Interbank Rates at 10:19 am against GBP movement.

GBP>EUR – 1.1847

GBP>USD – 1.2201

EUR>GBP – 0.8441

EUR>USD – 1.0299

GBP>CAD – 1.7583

GBP>AUD – 1.9665

GBP>SEK – 13.615

GBP>AED – 4.4807

GBP>HKD – 9.5020

GBP>ZAR – 22.856

GBP>CHF – 1.1116

GBP>PLN – 5.0541

Today’s Key Takeaways

• UK Retail Sales Slump: December retail sales fell short of expectations, with November figures also revised lower, underscoring a slowing UK economy and denting investor confidence.
• GBP Weakens: GBP declined across the board as markets increased the likelihood of three Bank of England rate cuts in 2025, with rate cut expectations rising from 27bps to 68bps since Wednesday's CPI data.
• USD Steady Amid Dovish Fed Comments: Despite dovish remarks from Fed member Waller, the USD remains firm as markets cautiously await President Trump's inauguration on Monday.
• Minimal Impact Expected from EU CPI Data: Final December CPI numbers from Europe are unlikely to influence currency markets today.

17th January 2025



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