FX market was 'strangled' in February, due to 'wait-and-see' approach from traders and investors.. |
The Pound has once again come through a tricky looking week rather unscathed, after playing the 'sitting duck' role with no major UK economic data released. GBP v USD is down 1% over the last month, with GBP v EUR down 0.5% in the last 2-weeks, but many had predicted worse scenarios. There was a host of mixed data out of the Euro-Zone & US this week which hasn't helped economists and data-houses in their predictions of when central banks will start cutting interest rates. For example, US GDP, German inflation and German unemployment rate all missed consensus with all confidence figures released coming in lower than anticipated. The Fed's favoured inflation gauge 'Core PCE inflation' unexpectedly rose in January by 0.4%, which was double that of December. This strengthened the USD as it reads that it's probably too early for the Fed to cut interest rates anytime soon. It was a similar story with the EU, which saw the headline and core inflation rate fall, but not as much as forecasts suggested. We will discuss what March has in store next week.. |