UK: Weekly FX Market Update 13 January 2025

GBP

• Sterling endured a torrid week last week. Investors appear to be losing confidence in the UK fiscal picture, as a period of stagflation becomes possible.

• Could Wednesday’s ten-year gilt auction and the release of CPI further weaken Sterling?

• UK Retail sales data rounds off the week.

EUR

• Whilst the Euro strengthened against the Pound, EURUSD fell again at the end of last week after strong US employment data.

• ZEW Economic Sentiment on Wednesday and Final CPI on Friday may be the highlights for the single currency.

• US inflation data is released on Wednesday. Could it continue to fuel the EURUSD downtrend?

USD

• The US is still enjoying strong growth, whilst slightly elevated inflation was the rationale for the released hawkish Federal Reserve meeting minutes.

• A positive Non-Farm Payrolls report followed on Friday, aiding a strengthening USD.

• President-Elect Trump is still threatening tariffs on everyone, with investors interpreting this as an inflationary policy, therefore supporting the US Dollar.

• US CPI is released this Wednesday. Could it be the data highlight of the week?

Main events for this week:

Mon Jan 13

No Top Tier Data

Tue Jan 14

10:00 EUR German ZEW Economic Sentiment

13:30 USD Producer Price Index

Wed Jan 15

07:00 GBP Consumer Price Index

12:00 GBP 10 Year Gilt Auction

13:30 USD Consumer Price Index

Thu Jan 16

00:30 AUD Employment Data

07:00 GBP Gross Domestic Product/Goods Trade Balance/Manufacturing Production

13:30 USD Retail Sales/Unemployment Claims

Fri Jan 17

07:00 GBP Retail Sales

09:00 EUR Retail Sales

10:00 EUR Final CPI

13:30 USD Building Permits

14:15 USD Industrial Production