- The sterling advances after UK wage data came in higher than estimated by economists but unemployment, however, posted an unexpected drop. UK Oct-Dec wages excluding bonus rose to 6.2% YoY, vs. 6.0% est., and UK Dec. unemployment ticked lower to 3.8%, vs. 4.0% est.
- GBP/USD is trading at 1.2641 and it is poised to test 1.2650-60 levels, where a lot of option expiries are found this week. From a BOE perspective, this data makes it harder for the central bank to lower rates early, really.
- The US Dollar is consolidating across the board as we prepare for today’s key US CPI, which should provide more hints to the Fed’s data dependent outlook. US inflation gauge is expected to have increased by 0.2% last month, the same as December’s revised figures.
- We keep expecting data to show that the market has priced in too much easing for this year, and this should continue to support the greenback.
- The euro is advancing this morning, but I feel like this is the market positioning itself ahead of the US inflation data later today. We are trading at 1.0772 and we are stuck in the 1.0760-1.0790 range since yesterday afternoon.
- EUR/GBP is lower on UK inflation data trading at 0.8520 and heading towards the major support at 0.85, where we have been testing since July 2023.
Around the World
- USD/JPY advanced 0.1% to trade near 149.40.
- AUD/USD fell 0.2% to touch 0.6518.
- NZD/USD dropped 0.5% to 0.6098 as inflation expectations fell to their lowest in two and half years.
