IFX Market Report: Thursday 10th February 2022

Foreign exchange markets once again saw little price action on Wednesday as investors turn their attention to today’s economic data releases. Sterling yesterday was able to remain well supported due to the Bank of England’s hawkish sentiment despite Huw Pill’s claim that the BoE will take a “measured rather than activist approach” when deciding on monetary policy at the central bank’s March meeting. Pill, BoE Chief Economist, yesterday “pushed back against the prospect of bigger-than-usual interest-rate rises” as the BoE look set to raise rates for the third consecutive time. The market has already fully priced in a 25bps hike on 17th March and a further four hikes in 2022.

Sterling remained steady yesterday against the Dollar, marking only a subtle loss by the end of the session. GBPUSD opened Wednesday at 1.3568 and closed at 1.3551. Moving forward, dependant on how this afternoon US data unfolds, Cable could gain some upside and reclaim the 1.36 handle.

GBPEUR also made a minor loss yesterday. The pair opened at 1.1878 and closed at 1.1850.

EURUSD continued to trade in a narrow range and “noticeably has not been hit by European Central Bank doves, such as Banque de France governor François Villeroy, saying that markets have overreacted to last week's ECB press conference”. EURUSD started Wednesday at 1.1422 and finished not far off at 1.1436.

On the data front, today’s focus will be US inflation and weekly jobs report. US Core Inflation YoY for January is due to be published at 13:30, forecasted at 5.9% with a previous of 5.5%. The MoM figure is released at the same time and expected at 0.5%. US Continuing Jobless Claims is forecasted to come in at 1615K this week, which would be less than last week’s 1628K. Initial Jobless Claims is also set to improve on last week’s reading, forecasted at 230K with a previous of 238K. Lastly, at 20:15, BoE Governor Andrew Bailey will be speaking.

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