USD set for longest winning streak since 2014
Improving US economic data has poured cold water on those who think the rate hikes from the US Federal Reserve are due to end. That expectation of a higher US rate has manifested itself into the US dollar strength. In fact, this recent period of strengthening for the US dollar may well be the longest winning streak we have seen since 2014. As it stands, that has brought the GBP/USD rate down to $1.2475 and the EUR/USD rate down to just above $1.07. However, as there is no significant US data today, we ought to expect some profit taking on this recent bout of US dollar strength. So please don’t be surprised if we see both of these exchange rates at slightly higher levels before the end of the day.
GBP/EUR slips ahead of next week’s data and rate decision
Having pushed above €1.17 on Tuesday, the pound didn’t have the oomph to carry on with the upward trend and we’ve seen a correction in the latter part of this week. The GBP/EUR rate is back down to €1.1650. The only significant data expected from either side of the Channel today came in the form of the German Consumer Price Index which marginally lowered to 6.1%. That was entirely expected by the markets and therefore the impact was minimal. Next week’s data diary includes UK employment data and an interest rate decision by the European Central Bank. Most are expecting the ECB to leave their base rate on hold at 3.75% but, as is always the case, the words used in their statement and press release will hopefully paint a picture of future decisions and the markets will react to that more than the actual announcement itself.