Key Headlines:

• The USD faces continued pressure despite pushback from Trump.
• European inflation is expected to remain persistent.

Recap

USD experienced significant volatility yesterday, following reports that Trump's tariff plans would target only specific critical imports. Markets interpreted this as a softer stance, leading to a USD selloff and a rebound in GBPUSD and EURUSD to erase early-year losses. GBP gained additional support from improved market risk sentiment. However, Trump later dismissed the reports, affirming his tariff plans remain unchanged, which helped the USD recover some losses. Meanwhile, higher-than-expected German CPI provided a boost to the EUR ahead of today’s EU inflation data. In Canada, political uncertainty intensified with Prime Minister Justin Trudeau announcing his resignation after nine years in office.

Today’s Rates

Today's Interbank Rates at 09:28 am against GBP movement.

GBP>EUR – 1.2050

GBP>USD – 1.2564

EUR>GBP – 0.8298

EUR>USD – 1.0427

GBP>CAD – 1.7971

GBP>AUD – 1.9998

GBP>SEK – 13.813

GBP>AED – 4.6140

GBP>HKD – 9.7630

GBP>ZAR – 23.292

GBP>CHF – 1.1355

GBP>PLN – 5.1205
 

Today’s Key Takeaways

1.  EU CPI Data in Focus:

• Higher-than-expected CPI figures could bolster the EUR, helping it recover further against the USD after its recent drop to a 2-year low.
• 
  
• Any EURUSD rebound is expected to be short-lived due to ongoing market concerns over potential tariffs on the Eurozone.

2.  US Economic Data:

• Attention shifts to JOLTS job openings and ISM services data in the afternoon.
• Positive results would reinforce the narrative of US economic strength ("growth exceptionalism"), favouring sustained USD strength.

3.      Strategic Insight:

• Any temporary USD weakness presents an opportunity for businesses to consider covering future USD requirements.

07th January 2025

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