Whats on the agenda before Trump takes term?
The GBP remains under pressure, hampered by ongoing concerns about the UK’s fiscal health. The GBP has continued to decline against most of its counterparts over the last 48 hours, reflecting persistently negative market sentiment. With no significant domestic data releases on the horizon, GBP is likely to stay subdued as investors concentrate on the nation’s financial outlook. One of the key reasons which has impacted the price of GBP is the rise in borrowing costs. The rise in bond yields has put a tight squeeze on the Chancellors £10bn headroom, raising concerns that Labour will not be able to meet their fiscal policies. As a result, the persistent uncertainty surrounding the UK’s economic stability is expected to keep Sterling weak in the short term and increase the pressure mounting on the government.
On the flip side, the USD has continued gaining strength after the incredibly strong jobs report which was published on the 10th of Jan. The unemployment rate in the US fell from 4.2% to 4.1% and as a result, the Federal Reserve imply that interest rates may not be moving in 2025 which has continued the global drive into US assets. Additionally, the Dollar’s ascent was bolstered by a risk-off sentiment in global markets, with investors turning to the currency as a safe haven. Overall, heightened caution and evolving economic outlooks continue to support the Dollar’s dominance in the current market landscape.
Looking ahead to the rest of the week, we focus on inflation figures set to be released in the US which will give the market more insight into the economy the Trump administration will be inheriting.
