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The Week Ahead – Heavyweight data and central bank decisions before year’s end

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EURUSD awaits double catalyst

As both central banks fire their final salvos for the year, the euro will consolidate. Expectations of inflation remain high in the eurozone, which will boost the probability of a 50 bp increase by the ECB. However, the greenback drives market dynamics. Despite the euphoria from Powell’s hint of slower tightening, robust jobs and services data have sowed doubt about the terminal rate, which may end up above 5% if the Fed vows to keep interest rates restrictive for a prolonged period of time. Only a soft US CPI reading would keep the pivot hope alive, and the dollar under control. 1.0900 This is the biggest hurdle. 1.0300 The first support.

GBPUSD braces for volatile week

The pound steadies ahead of key economic data and the BoE’s policy meeting. Sterling continues to recover after the previous administration’s mini-budget fiasco, which suggests that traders have regained faith in the UK’s policymaking. As the BoE rate decision is made on Thursday, volatility could be caused by inflation and employment. Andrew Bailey, Governor, has attempted to adjust market expectations by saying the peak rate could be lower than it is currently priced in. The market is betting on a 50-bp rate hike ,…



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