Monthly Currency Report – February 2024

Friday 1st March– Friday saw fluctuations in the Pound (GBP) as market volatility exposed the UK currency. Contributing to this turbulence was the final British manufacturing PMI, which, despite being revised higher, still indicated a nineteenth consecutive month of contracting activity.


Similarly, the Euro (EUR) experienced choppy movement, though it managed an overall upward trend thanks to a hotter-than-expected consumer price index. The CPI revealed that both headline and core inflation cooled less than anticipated last month, dampening expectations for an impending interest rate cut from the European Central Bank (ECB).

At the close of last week’s session, the US Dollar (USD) wavered lower due to a weaker-than-expected manufacturing PMI, which weakened the ‘Greenback’. The latest ISM survey showed that US factory activity unexpectedly slipped deeper into contraction territory last month, raising concerns about the American economy’s health.

Thursday 29th February

There was some choppy trading for GBP as the absence of UK economic data left Sterling susceptible to market swings. As the session drew to a close, GBP exchange rates dipped lower, reflecting the UK currency’s struggle to garner support.

Contrary to expectations, EUR saw an initial rise on Thursday, despite disappointing retail sales and unemployment figures from Germany. However, as the day progressed, EUR relinquished its gains as cooler German inflation data sparked speculation about potential ECB interest rate cuts.

Meanwhile, USD encountered volatility on Thursday, spurred by a larger-than-anticipated increase in US jobless claims and a cooldown in the core PCE price index. Despite January’s slight inflation easing from 2.9% to 2.8%, implying enduring price pressures, USD initially faltered before staging a recovery.

Wednesday 28th February

The Pound saw some uncertain trading conditions as market sentiment turned sombre, causing it to slip against safer currencies while making gains elsewhere. Additionally, hawkish remarks from Bank of England (BoE) policymaker Catherine Mann helped to limit potential losses.

In contrast, EUR encountered selling pressure at the beginning of the session due to an unforeseen decline in the Eurozone’s economic sentiment index. Nevertheless, EUR regained momentum later on, benefiting from a retreat in USD and an apprehensive market atmosphere.

USD initially advanced on Wednesday, buoyed by bearish sentiment favouring the safe-haven currency. However, its gains were pared back as profit-taking ensued and a minor downward revision to US GDP in the fourth quarter of 2023 was reported.

Tuesday 27th February

The Pound traded aimlessly due to the absence of UK economic data, leaving the currency adrift in the market. Furthermore, reports of a decline in UK shop price inflation weighed heavily on GBP, preventing it from gaining ground against weaker rivals.

EUR struggled to attract bids on Tuesday, subdued by gloomy German data. Despite a slight improvement in consumer confidence in the Eurozone’s largest economy as March approached, the index remained deeply negative, hindering EUR’s performance.

In contrast, USD staged a recovery on Tuesday as cautious market sentiment favoured the safe-haven currency. Despite a significant decline in US durable goods orders, USD rebounded as investors sought refuge amid market uncertainties.

Monday 26th February

There was a good performance for the Pound against its weaker counterparts, buoyed by better-than-expected retail sales data. Despite remaining in negative territory, the Confederation of British Industry’s (CBI) latest distributive trades survey surpassed forecasts, contributing to GBP’s success.

Similarly, EUR experienced an uptick on Monday, driven by its strong negative correlation with a declining USD. Furthermore, bullish remarks from ECB President Christine Lagarde provided a boost to EUR, with Lagarde hinting at the possibility of interest rates remaining elevated for a prolonged period.

In contrast, USD faced initial challenges on Monday due to a lack of significant American economic data and a retreat in US Treasury bond yields. Nonetheless, a recovery in Treasury yields helped USD claw back some of its earlier losses as the trading session unfolded.

Friday 22nd February

Success greeted the Pound (GBP) on Friday amidst renewed optimism regarding the UK economy’s future. Ofgem, the UK energy regulator, made waves by announcing a significant drop in the energy price cap slated for April, promising to alleviate the burden on British consumers and thereby addressing the nation’s cost-of-living challenges.The Euro (EUR) faced uncertainty as the week drew to a close, prompted by Germany’s latest business sentiment index. While the data hinted at improved morale, concerns lingered among businesses in the Eurozone’s largest economy, who remain apprehensive about the spectre of recession.

Initial downward pressure on the US Dollar (USD) ensued from a sharp decline in US Treasury bond yields on Friday. However, a subtle shift in market sentiment later in the session allowed the safe-haven currency to recoup some of its losses.

Thursday 22nd February

Volatility marked the Pound’s (GBP) performance yesterday, despite a positive outcome for the UK’s services PMI. Despite indications of increased business activity and persistent inflationary pressures in the PMI surveys, Sterling struggled to gain traction.

The Euro (EUR) experienced fluctuations during Thursday’s session, driven by mixed PMI data and ambiguous signals from the European Central Bank (ECB). While the Eurozone services PMI surpassed expectations, the manufacturing survey fell short. Meanwhile, the ECB expressed optimism about inflation while maintaining a cautious stance on interest rate adjustments.

The US Dollar (USD) initially faced downward pressure on Thursday, touching multi-week lows in the aftermath of the Federal Reserve’s cautious meeting minutes released Wednesday evening. However, the ‘Greenback’ managed to rebound, buoyed by a decline in US jobless claims.

Wednesday 21st February

Trading for the Pound (GBP) remained subdued on Wednesday, lacking significant UK economic data to spur movement. Uncertainty lingered among GBP investors following mixed comments from Bank of England (BoE) officials, leaving them speculating about potential interest rate cuts.

The Euro (EUR) initially maintained a tepid stance on Wednesday amid limited Eurozone data and subdued market sentiment. However, the release of the Eurozone’s flash consumer confidence report later in the day showed marginal improvement in morale, albeit still entrenched in negative territory, keeping the EUR subdued.

The US Dollar (USD) navigated without a discernible trend during Wednesday’s session as investors awaited the Federal Reserve’s latest meeting minutes. USD encountered turbulence in the evening after the minutes revealed a more dovish tone than expected.

Tuesday 20th February

At the start of the day, the Pound (GBP) stumbled, briefly dipping to multi-week lows against select counterparts as markets recalibrated in anticipation of potential Bank of England (BoE) rate adjustments. This reevaluation coincided with BoE Governor Andrew Bailey and his colleagues’ appearance before the Treasury Committee. However, Sterling found its footing later in the day, buoyed by a Reuters survey suggesting that economists foresee rate cuts occurring later than previously estimated.

Meanwhile, the Euro (EUR) witnessed a mixed performance driven by the absence of significant Eurozone economic data, leaving the currency vulnerable to market oscillations. Nevertheless, its inverse relationship with a weakening US Dollar (USD) offered some resilience to EUR exchange rates, mitigating potential declines.

Conversely, the US Dollar (USD) tumbled to weekly lows amidst a notable decline in US Treasury bond yields. Sentiment in the market hinted at a potentially more assertive approach to policy easing by the Federal Reserve, echoing recent remarks from Fed officials.

Monday 19th February

The Pound (GBP) experienced a downturn on the first day of the week following commentary from former Bank of England (BoE) Chief Economist Andy Haldane. Haldane, renowned for his warnings regarding persistent inflation risks upon departing from the BoE in 2021, advocated for imminent interest rate reductions to mitigate the risk of a deeper recession in the UK. Economic apprehensions and speculation surrounding rate adjustments exerted pressure on Sterling.

Similarly, the Euro (EUR) faced downward pressure on Monday amid fresh concerns surrounding Germany, the largest economy in the Eurozone. Projections from the Bundesbank indicating a potential technical recession in Germany during the first quarter of 2024, along with cautionary remarks about the lack of economic recovery, dampened confidence in the EUR.

Despite limited trading activity, the safe-haven US Dollar (USD) managed marginal gains against several counterparts on Monday. A sense of caution prevailing in the market, coupled with diminished expectations of Federal Reserve rate cuts following the boost in last week’s inflation data, contributed to the uptick in the ‘Greenback’.

Friday 15th February – As the week neared its end, the Pound (GBP) maintained a subdued position despite the UK’s retail sales data for the latest period surpassing expectations. Although there was a notable surge in sales growth, it failed to counter previous data releases that heightened speculation about a potential interest rate adjustment from the Bank of England (BoE).

Initially showing strength on Friday, the Euro (EUR) was buoyed by cautious remarks from European Central Bank (ECB) executive board member Isabel Schnabel, advising against premature adjustments to the bank’s policy stance. However, later in the session, the Euro’s negative correlation with the US Dollar (USD) dampened demand for the EUR.

Ending the week positively, the US Dollar saw gains following the release of the latest US producer price index, with January’s figures surpassing expectations, indicating a more substantial rebound and maintaining pressure on US inflation.

Thursday 15th February

The Pound (GBP) experienced a decline after the UK’s fourth-quarter GDP growth rate contracted more than anticipated, confirming a recession in the British economy over the past year. With elevated interest rates and ongoing cost-of-living concerns contributing to the downturn, markets increased speculation about an impending rate cut from the Bank of England (BoE).

The European Commission revised down its forecasts for Eurozone growth and inflation for 2024, leading to subdued trading for the Euro (EUR) at the outset of the session. However, the EUR managed to recover later in the afternoon, benefiting from its negative correlation with a weakening US Dollar (USD).

On Thursday, the US Dollar weakened following disappointing US retail sales data, showing a larger-than-expected decline in domestic sales in January, contrary to forecasts. Additionally, a cautiously optimistic market sentiment reduced demand for the safe-haven ‘Greenback.’

Wednesday 14th February

There was a notable decline at the start of Wednesday’s session for the Pound, erasing gains from the previous day, following a miss in the UK’s consumer price index for the latest period, which held steady instead of rising as forecasted. Consequently, expectations rose for a Bank of England (BoE) interest rate cut as early as May.

The Euro (EUR) stumbled against its stronger counterparts on Wednesday, despite an unexpected surge in Eurozone industrial production in December. The downturn came amid a positive market sentiment, which dampened demand for the single currency.

The US Dollar (USD) edged lower, trimming some of its gains following Tuesday’s inflation data, as a preference for riskier assets weighed on the safe-haven currency. Additionally, a slight decrease in US Treasury yields exerted pressure on USD exchange rates.

Tuesday 13th February

Following stronger-than-expected British jobs data there was a surge in the Pound, with the UK unemployment rate unexpectedly declining in the three months to December, while wage growth moderated less than anticipated. This reduced speculation of an interest rate cut from the Bank of England (BoE), bolstering GBP.

Against weaker rivals, the Euro strengthened on Tuesday after Germany’s latest economic sentiment index surpassed expectations, reaching a one-year high. However, this did not prevent the single currency from losing ground against its stronger counterparts.

The US Dollar (USD) rallied in the afternoon following a hotter-than-expected US consumer price index. Headline inflation in the US eased less than forecast last month, while core inflation remained steady unexpectedly. This led to a decrease in market expectations for a rate cut by the Federal Reserve from 16% to 8.5%.

Monday 12th February

The Pound (GBP) faced challenges during Monday’s session due to a lack of UK economic data, leaving the currency vulnerable to losses. Additionally, sentiment towards Sterling may have been dampened by a new analysis from Goldman Sachs, which highlighted ‘a significant long-run output cost of Brexit.’

The Euro (EUR) encountered selling pressure on Monday following dovish comments from European Central Bank (ECB) policymaker Fabio Panetta. Panetta’s remarks suggested that the time for interest rate cuts is approaching rapidly, fueling expectations of an impending shift in the ECB’s monetary policy stance.

The US Dollar (USD) remained subdued on Monday as investors were hesitant to adjust their positions ahead of the upcoming US inflation data. Nonetheless, the USD managed to strengthen against some weaker rivals following recent hawkish statements from Federal Reserve officials.

Friday 9th February

The Pound (GBP) hesitated towards the end of the previous week, responding to divergent remarks from Bank of England (BoE) policymaker Jonathan Haskel. While Haskel defended his vote for an interest rate hike during the BoE’s January meeting, citing persistent inflation, he also admitted to a finely balanced decision, dampening the Pound’s momentum.

On Friday, the Euro (EUR) remained subdued following the release of Germany’s final consumer price index for January. The CPI confirmed a decrease in inflation to its lowest level since June 2021, igniting speculation about potential interest rate cuts by the European Central Bank (ECB).

The US Dollar (USD) softened on Friday after a minor downward revision in recent US inflation data for December. This modest inflation adjustment led to slight increases in bets for Federal Reserve rate cuts, exerting downward pressure on the USD.

Thursday 8th February

The Pound (GBP) exhibited mixed performance on Thursday, advancing against riskier currencies but faltering elsewhere amid a gloomy market sentiment. Hawkish remarks from Bank of England (BoE) policymaker Catherine Mann provided some support to the Pound, highlighting persistent inflationary pressures and potential further upside shocks.

Thursday saw the Euro (EUR) trading cautiously as a lack of significant Eurozone economic data subdued the common currency. Nevertheless, the Euro, considered a safer option, managed to strengthen against its riskier counterparts amidst market apprehension.

The safe-haven US Dollar (USD) gained traction on Thursday after reports revealed a deeper deflation in China, unsettling market sentiment. Additionally, lower-than-expected US jobless claims in the afternoon further reinforced the USD, reinforcing expectations for delayed Federal Reserve interest rate cuts.

Wednesday 7th February

The Pound (GBP) saw some uplift on Wednesday following comments from Bank of England (BoE) Deputy Governor Sarah Breeden. Emphasising persistent high inflation, Breeden hinted at a distance to go before declaring victory, suggesting that interest rate cuts are not imminent.

On Wednesday, the Euro (EUR) remained subdued following disappointing data showing a larger-than-expected contraction in German industrial production in December. Despite this, the Euro managed to hold its own against certain riskier currencies amidst a souring market sentiment.

The US Dollar (USD) experienced muted movement on Wednesday amid an uncertain market atmosphere and minimal US economic data. With US Treasury yields stabilising, the ‘Greenback’ faced limited fluctuations.

Tuesday 6th February

Tuesday saw some bargain-hunting activity for the Pound (GBP) as investors seized opportunities amid recent declines. Moreover, an optimistic market sentiment provided some support to the increasingly risk-sensitive GBP.

The Euro (EUR) weakened on Wednesday, despite impressive German factory orders data for December, which exceeded expectations. This selling bias was reinforced by a decline in Eurozone retail sales during the same period.

The US Dollar (USD) remained mostly stable on Tuesday amidst a positive market sentiment that diminished demand for the safe-haven ‘Greenback’. However, ongoing speculation surrounding Federal Reserve interest rate cuts following hawkish remarks from Chair Jerome Powell kept the USD buoyed.

Monday 5th February

On Monday, the Pound (GBP) faltered, despite a revision upwards in the UK’s final services PMI. While the services sector showed accelerated activity, signs of easing inflation weighed on GBP as markets speculated about potential Bank of England (BoE) interest rate cuts.

The Euro (EUR) exhibited muted movement on Monday, slipping against stronger counterparts and maintaining a sideways trajectory elsewhere. This followed lacklustre German trade data and a slowdown in Eurozone producer prices, sparking speculation about potential ECB rate cuts.

Monday saw the US Dollar (USD) continuing its recent uptrend, supported by hawkish comments from Federal Reserve Chair Jerome Powell over the weekend. Additionally, a better-than-expected ISM services PMI in the afternoon further bolstered the USD’s attractiveness, leading to reduced expectations of Federal Reserve interest rate cuts this year.

Friday 2nd February

The Pound (GBP) traded aimlessly, lacking a clear direction due to the absence of UK economic data. The currency’s trajectory was shaped by market sentiment, with GBP rising against riskier peers while losing ground elsewhere as risk appetite diminished.Closing out the week, the safer Euro (EUR) saw gains against its weaker counterparts amid a bearish market mood. However, the single currency faced pressure from its strong negative correlation with the US Dollar (USD).

A robust non-farm payrolls report on Friday catapulted the US Dollar higher, indicating a robust American labour market. With an impressive addition of 353,000 jobs in January, markets adjusted their expectations on a March rate cut from the Federal Reserve, giving a significant boost to USD.

Thursday 1st February

Shifting to Thursday, the Pound (GBP) experienced notable volatility in response to the Bank of England’s (BoE) interest rate decision. Although the rates remained unchanged, GBP initially climbed due to two rate-setters voting for a hike. However, dovish comments from Governor Andrew Bailey reversed the gains.

The Euro (EUR) found success against some peers on Thursday, despite a modest cooldown in Eurozone inflation. Support came from the bloc’s record-low unemployment rate in December, and European Central Bank (ECB) President Christine Lagarde’s resistance to rate cut speculations.

The US Dollar (USD) opened the session cautiously on the front foot on Thursday, but later faced profit-taking after hitting multi-week highs. Weaker US jobs data in the afternoon added pressure, resulting in an overall decline for the ‘Greenback’.

Wednesday 31st January

Moving to Wednesday, the Pound (GBP) wavered without a clear direction, influenced by a lack of UK economic data and a mixed market mood. The shifting tone impacted the increasingly risk-sensitive Pound.

The Euro (EUR) faced mixed movement on Wednesday, initially finding success despite slumping German retail sales in December. However, a larger-than-forecast cooldown in German inflation in the second half of the session led to a trimming of gains.

The US Dollar (USD) slumped on Wednesday following a sharper-than-forecast slowdown in hiring according to ADP employment figures. However, it rallied later in the day after the Federal Reserve firmly pushed back on expectations of a March rate cut.

Tuesday 30th January

On Tuesday, the Pound (GBP) faced selling pressure as new data revealed a cooling in UK shop inflation. The International Monetary Fund (IMF) downgraded the UK’s 2025 growth forecast and advised against expected tax cuts, further impacting GBP.

The Euro (EUR) rallied on Tuesday after Eurozone GDP data showed the bloc avoided a recession in the fourth quarter of 2023. The unexpected rise in year-on-year GDP figures provided additional support.

The US Dollar (USD) ticked higher on Tuesday, despite a cautiously upbeat market mood. Stronger-than-expected US jobs data and a rise in US Treasury bond yields contributed to the ‘Greenback’s’ resilience.

Monday 29th January

On Monday, the Pound (GBP) slipped with no supporting economic data, leaving it vulnerable to losses against stronger peers.

The Euro (EUR) plunged to a six-month low against the Pound on Monday following dovish commentary from European Central Bank (ECB) policymakers. The prospect of an interest rate cut signalled a bearish outlook.

The safe-haven US Dollar (USD) initially weakened on Monday amid cautious optimism and a drop in US Treasury yields. However, it later recovered some losses as risk appetite waned.

Currency Ranges for the month:

GBP/USD: Low: 1.25198  High: 1.27008

GBP/EUR: Low: 1.16487  High: 1.17641

EUR/USD: Low: 1.07  High: 1.08713



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