USD: The GBP/USD exchange rate dipped on Thursday, driven by a surprising drop in US initial jobless claims. Despite a stronger US Dollar against most currencies, caution was advised by Tom Barkin from the Richmond Federal Reserve, who highlighted the need to consider seasonal adjustments in the data. Nonetheless, the US Dollar continued to rise after market digestion.

GBP: The Pound faced a narrow range amid a risk-off market mood on Thursday, influenced by troubling Chinese inflation data. With China’s deflationary trend worsening, the Pound’s risk sensitivity was notably affected. Susannah Streeter of Hargreaves Lansdown referred to Chinese disinflation as the ‘evil twin’, indicating the market’s turn towards safer assets due to the steep fall in prices.

EUR: European Central Bank (ECB) members conveyed mixed signals regarding potential rate cuts. While Francois Villeroy de Galhau suggested a possible cut this year, Martins Kazaks remained less optimistic. ECB’s stance on rate cuts hinges on evidence of inflation returning to its target, with policymakers emphasizing the need for more data on wage growth before considering policy adjustments. ECB’s next meeting in March is anticipated to provide clearer insights into future policy decisions.