USD Analysis: The U.S. dollar took a step back despite robust PMI results, setting the stage for a potential rebound in the coming days. Key U.S. economic data, particularly the fourth-quarter gross domestic product (GDP) numbers, scheduled for release on Thursday, could play a pivotal role. With estimates pointing to a 2% expansion at an annualized rate, traders are closely watching for insights into the economy’s health, with a keen focus on household expenditures. Positive surprises in economic data have the potential to sway the tide in favor of the greenback.

GBP Overview: The British Pound navigated a mixed path as upbeat PMI data clashed with disappointing figures from the Confederation of British Industry (CBI). Earlier in the week, positive services and manufacturing data fueled optimism, but the latest CBI distributive trades balance painted a different picture. Retail sales volumes saw their sharpest decline since January 2021, adding headwinds to the Pound. The risk-off sentiment was further compounded by key U.S. data, creating uncertainty ahead of central bank decisions from both the Bank of England and the Federal Reserve.

EUR Economic Snapshot: In the Euro area, the economic landscape revealed a nuanced picture. Net saving increased to €734 billion, reflecting 6.5% of euro area net disposable income. However, net non-financial investment decreased to €564 billion, primarily due to reduced investment by non-financial corporations. Euro area net lending to the rest of the world grew to €216 billion, driven by increased saving and decreased non-financial investment. Noteworthy increases were observed in net lending by households, financial corporations, and non-financial corporations, while general government net borrowing decreased, contributing less negatively to euro area net lending.