Now that normal service has resumed in 2023 the Dollar has lost some ground against the majors after recent weak data and talks of slowing interest rate hikes.
Data on Friday showed that the US Services sector contracted for the first time since May 2020. The 49.6 figure was well below the previous 56.5 which points towards the US heading into or already being in recession for the first quarter of 2023.
Yesterday US FED officials discussed the first interest rate decision of 2023 which will take place on 1st February. Atlanta Fed Bank President Raphael Bostic stated that should CPI figures which will be released on Thursday this week show that inflation is cooling, then they will likely only hike rates by 0.25%. Other policymakers suggested that both 0.5% and 0.25% are on the table depending on the outcomes of other data.
Data from the UK has been very limited this week but GBPUSD touched 1.22 yesterday after touching 1.1830 on Friday last week and now resides at 1.2170.
German and French inflation figures showed positive signs as they fell from their peak of 10.4% & 7.1% respectively, to 9.6% & 6.7%.
The Euro rose after the data to 1.0737 against the dollar, the highest since June 2022.
Data to look out for this week includes US Inflation CPI on Thursday, UK GDP figures and Industrial / Manufacturing data on Friday.
GBPUSD resides at 1.2170
EURUSD resides at 1.0737
GBPEUR resides at 1.1330