GBP: The GBP/USD pair experienced fluctuations, starting at a multi-week low before a modest rebound during the early Asian session on Tuesday. This movement was primarily influenced by the US Dollar’s resurgence, driven by diminishing expectations of an imminent interest rate cut by the Federal Reserve. Notably, positive US economic data, including the ISM Services PMI, contributed to the Dollar’s strength. Bank of England’s Chief Economist hinted at potential rate cuts in the UK, provided that economic progress continues. Market watchers await key UK economic indicators, such as BRC Retail Sales and Construction PMI data, for further insights into the GBP’s trajectory.

USD: Speculation surrounding the Federal Reserve’s monetary policy dominated discussions, with Chair Jerome Powell suggesting the possibility of three interest rate cuts throughout the year. This narrative bolstered the US Dollar, diverging from initial projections of a decline. Additionally, market attention turned to the Bank of Canada, with expectations of interest rate cuts amidst falling oil prices. Investor focus remains on upcoming Canadian economic data, particularly labor market statistics, for clues about the USD/CAD pair’s direction.

EUR: The Euro faced considerable challenges in January, recording its worst performance against the US Dollar since 2015. Forecasts suggest further downward pressure on the Euro in 2024, contradicting earlier expectations of a recovery. The Dollar’s resilience, fueled by robust US economic indicators and Powell’s cautious approach to rate cuts, has contributed to the Euro’s decline. The recent ISM survey revealing strong employment figures in the US further reinforced the Dollar’s position. Analysts remain cautious about the Euro’s prospects amid ongoing uncertainties in the global economy.