James Elliot

Services inflation is the big concern for the BoE and it has stuck around the 5% level. The market expects only 2 cuts from the BoE into November next year.

The Fed have shifted more hawkish and project only 2 cuts next year. Stronger growth prospects and higher inflation influenced the projections.

The USD dropped nearly 1% on Monday as the Washington Post published an article claiming Trump was considering lighter tariffs.

German inflation is up from a September low of 1.6% to 2.6%. Energy costs have risen and there inflation could rise further, limiting the scope for rate cuts by the ECB.

Rising yields are usually a positive for a currency, but UK yields have hit extreme levels and may force government spending cuts or higher taxes.

Minutes from the December meeting reveal they remain concerned on the economy and inflation may undershoot their 2% target.

Donald Trump will be inaugurated on Monday. He is likely to make several moves on his first day and markets are braced for news on tariffs.

The BoE may cut more than the market has priced in if the government were to cut spending.

Markets are settled on Wednesday, with most dollar pairs unchanged and EURGBP also flat near 0.845.

While the readings remained on the weak side, there have been improvements and the composite figure as risen above 50.