A weak manufacturing sector in the UK economy and growing recession fears put the British Pound on the back foot at the start of the new year. In the end, the bleak forecast for the UK might compel BoE policymakers to reevaluate their position on maintaining high interest rates for an extended length of time.
Recent data revealed that the manufacturing sector in the Eurozone was still in contraction at the end of 2023, adding to the Euro’s woes. In actuality, manufacturing output declined further and factory job losses persisted for a seventh consecutive month. Investors are waiting for more clues on Eurozone inflation in Germany’s preliminary Harmonised Index of Consumer Prices for December.
The U.S. Dollar steadied after a sharp overnight rebound as anticipation of more cues on the Federal Reserve saw markets question expectations for early interest rate cuts. In fact, while the Fed signalled in December that it will begin trimming rates in 2024, it gave scant cues on the timing of the move.
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