USD Stays Down, GBP Enters Recession & EUR Finds Support.

USD: The US Dollar sees a modest decline in the forex market, settling at $104.640, marking a marginal 0.07% decrease. In the Eurozone, economic indicators present a mixed picture. Flash Employment Change maintains its stability at 0.3% quarter-over-quarter, while Flash GDP remains stagnant for the quarter, aligning with expectations. However, Industrial Production surprises with a notable 2.6% month-over-month increase, surpassing earlier predictions. Despite gains in Wall Street indices, the USD Index closes in negative territory as risk sentiment improves during the American trading session.

GBP: The Pound Sterling retreats in early European trading as the UK economy slips into a technical recession, contracting by 0.3% in the fourth quarter. This marks the second consecutive quarter of contraction, meeting the criteria for a technical recession. The preliminary Gross Domestic Product (GDP) data released by the UK Office for National Statistics (ONS) signals potential challenges ahead. As the economy faces headwinds, expectations of early rate cuts by the Bank of England (BoE) rise. The likelihood of aggressive monetary policy adjustments to stimulate growth gains traction, impacting investor sentiment and foreign inflows into GBP. Despite steady consumer price inflation in January, forecasts of further acceleration remain muted. BoE Governor Andrew Bailey anticipates price pressures to ease by Spring, although wage growth and service inflation continue to skew upwards, posing challenges to achieving the 2% inflation target.

EUR: The EUR/USD pair continues its upward trajectory for a second consecutive session, bolstered by a weaker US Dollar amidst softer US yields. Market sentiment undergoes a notable shift, with expectations leaning towards no interest rate adjustments by the Federal Reserve (Fed) in the near term. Eurozone economic indicators, however, present challenges for the Euro. The release of seasonally adjusted Eurozone Gross Domestic Product (GDP) data reveals stagnant growth in the fourth quarter, in line with expectations. Christine Lagarde, President of the European Central Bank (ECB), acknowledges ongoing subdued economic activity in the region, based on recent data trends. Despite the economic headwinds, the Euro maintains its momentum as investors navigate shifting market dynamics.