Last week was generally quite stable for Sterling following the Bank of England decision where rates were held with no real immediate concern for any cuts coming soon- the big news though was the NFP report on Friday which showed that the U.S had added 353k jobs in January, which was almost double expectation.
This alongside wages increasing in the U.S gave traders a good reason to long the Dollar into the close on Friday after a pretty weak start this year. What this shows is that right now the U.S economy is in a good place and that the Fed does not need to rush an interest rate cut at this point- the timings being predicted are now getting later and later, but it seems there is no chance of a March cut for the Fed.
Looking at data this week- we begin on Monday with various PMI numbers coming out of Italy, France, Germany, Eurozone as a whole, the UK and the U.S. These numbers are important as any rises in this will definitely provide a push- U.S services PMI is expected higher which could push the GBPUSD rate lower- the UK PMI number is also expected slightly higher and is earlier in the day so we could see the Pound get an early boost.
On Tuesday we have the RBA interest rate decision where we are expecting more of the same- no change to policy and potentially no real news on cuts and forward guidance- all Central Banks are now data-focused and can’t afford to make any mistakes in regards to announcements so I expect the same in Australia this week. Later on Tuesday we have UK construction PMI, which is expected to improve slightly but still under the 50 level.
As far as data is concerned this week these are the major releases, we have various Central Bankers speaking throughout the week and it will be interesting to see what is said, however generally speakers stay “on script” and just back up whatever is said in the previous meeting, so I am not expecting any volatility from these.
