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FX Majors Weekly Report

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Published date: 20 January 2025

GBPEUR

GBP/EUR has remained on the back foot, with market nerves more focused on shaky UK fundamentals, while the eurozone has remained in relative stasis. Despite an initial bounce from technical support at 1.1860, price action is once more oriented towards a 1.17 handle. Unemployment/wage data tomorrow are a focus for sterling, as well as Friday’s PMI data for both the UK and eurozone.

GBPUSD

GBP/USD volatility reduced significantly from the prior week. UK inflation, released last Wednesday, came in below expectations at 2.5%, helping calm Gilt markets and provide some respite for sterling and Rachel Reeves. This week, Tuesday morning’s unemployment data and Friday’s PMI data are the key releases. In the US, President Trump’s early policy direction is a key focus for markets.

EURUSD

EUR/USD edged higher across the week, as wider bond market volatility reduced – a pullback in the US 10-year yield helped the dollar to soften a touch. German ZEW economic sentiment and Friday’s PMI data are key drivers for euro sentiment this week, ahead of next week’s (Jan 30th) ECB policy meeting. In the US, the inauguration of Trump and associated executive orders are a focus, following a strong dollar rally in recent months, which could
become more two-sided.

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