The British Pound is strongly supported, and the upcoming week’s heavy economic calendar may provide an additional boost if data shows that the UK economy gained up pace at the start of the year. In reality, inflation, wages, GDP, and retail sales data will be widely watched, and if the data exceeds forecasts, markets will expect rate reduction bets to fall even lower, resulting in increased sterling upside.

The Euro has been weakened by increased expectations that the European Central Bank will begin reducing interest rates at the start of the second quarter. In fact, the bets were supported by a drop in German inflation, which fell to 3.1% YoY in January from 3.8% the previous month. Moving forward, investors are looking to the Eurozone’s first estimate of fourth-quarter GDP growth numbers, which will be released on Wednesday.

The dollar remains the best-performing currency in 2024, but it has lost some momentum as investors await a flood of interest rate indications from the United States this week. The CPI data for January is due tomorrow, and inflation is predicted to ease slightly. However, price pressures are projected to remain somewhat persistent, with the core CPI reading in particular remaining far above the Federal Reserve’s 2% annual objective – a scenario that offers the Fed more reason to keep rates higher for longer.

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