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To recap over the past week, we saw Sterling regain some lost ground throughout generally more positive FX markets.
The main market focus this week will be the monetary policy, with both the Federal Reserve and Bank of England due to meet. Although the Fed aren’t expected to make any rate changes, we could see a slightly more positive tone from the meeting statement. Investors can also be expected to keep an eye out for any indications from the FOMC regarding the next US rate hike.
Regarding the Bank of England, barring any surprises, Sterling’s reaction could be fairly limited. This would likely be due to the Bank of England highlighting any risk factors to the economy, alongside their inflation report. On a more positive note, we have seen better than expected performance from the UK economy, and they should also continue to suggest that inflation will exceed its 2% target for a period.
Trump begins to implement policies
Furthermore in the US, President Trump has begun to implement his policies, with the more controversial of those being the travel ban. The president stated that if you are a dual citizen of one of those (including Iran, Iraq, Somalia, Sudan, Syria and Yemen) countries travelling to the US, from outside of those countries, then the order does not apply to you.
The only dual nationals who might have extra checks are those coming from one of the seven countries themselves – for example, a UK-Libya dual national coming from Libya to the US.
It should be interesting to see how the rest of the world reacts to this over the next few weeks, and to see Trump’s impact on the US dollar.
Data to come
Overall today, markets are expected to remain fairly quiet, with limited macro data, although we’re expected to see a release for Eurozone consumer confidence at 10.00am and some personal spending figures from the US at 1.30pm.
