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<\/figure>\n\n\n\nGBP \u2013 Fundamentals to continue leading the pound<\/h2>\n\n\n\n
On a macroeconomic level, we note that the UK faced a lacklustre week with no major financial releases stemming from the country.\u00a0 Looking at next week\u2019s financial releases traders may be interested in the release of the UK\u2019s Halifax house prices for February on a month-on-month basis. Should the financial release showcase a higher rate than 0.7%, it could potentially aid the British pound, as it may infer that inflationary pressures in the economy may have not dwindled and thus could provide at best some support for the pound.<\/p>\n\n\n\n
On a monetary level ,we would like to note the comments made by BoE Ramsden who stated per Reuters that \u201cBritish inflation is at least as likely to undershoot the Bank of England’s latest forecasts as it is to match them, potentially requiring faster rate cuts,\u201d implying that the bank may embark on a more aggressive rate cutting path than what was previously anticipated. In turn his comments could be perceived as dovish in nature and could thus weigh on the pound. However, should other BoE policymakers emerge to challenge this \u201cdovish\u201d rhetoric it could potentially aid the pound<\/p>\n\n\n\n
Analyst\u2019s opinion (GBP) <\/p>\n\n\n\n
\u201cGiven the absence of high impact financial releases from the UK and the relative stability of the UK Government, we would not be surprised to see the pound ceding control of it\u2019s direction to other stronger currencies in the coming week.\u201d<\/em><\/p>\n\n\n\n On macroeconomic level, the BOJ\u2019s Core CPI rate on a year-on-year basis came in hotter than expected at 2.2% versus the expected rate of 2.0% and even higher than the prior rate of 1.9%. The hotter than expected inflation print tended to paint a picture that inflationary pressures in the Japanese economy tend to be accelerating. In turn, this may increase pressure on the BOJ to continue on its rate hiking policy in their next meeting, in an attempt to counter inflation. In turn this could aid the JPY and even more so should BOJ policymakers imply that further rate hikes are to come during the year. On the flip side should BOJ policymakers showcase some concern and opt for a much more gradual rate hiking path it could weigh on the JPY. However, the Tokyo CPI rates which were released earlier on today, showcased easing inflationary pressures with the Core PCE rate coming in at 2.2% versus 2.3% which is even lower than last month\u2019s rate of 2.5%.<\/p>\n\n\n\n Analyst\u2019s opinion (JPY) <\/p>\n\n\n\n \u201cThe contradiction between the CPI rates may be of some concern for the BOJ and could thus increase calls for more information to be gathered. Yet we remain steadfast in our opinion that the BOJ may continue raising rates during the year which could aid the JPY as the banks counterparts appearing to be remaining on hold or cutting rates\u201d<\/em><\/p>\n\n\n\n On a political level for Europe, we must of course mention the recent elections in Germany. In first place was the CDU\/CSU union with 28.5% of the vote, followed by the AfD\u2019s historic victory with 20.8% and in third place was the SPD with 16.4%. The elections seems to have shaken Germany\u2019s political core. Next up is the ratification of the vote on the 14th of March, yet given the result the CDU\/CSU will require a coalition in order to Govern Germany. This possibility was concerning, as some worried about a coalition government with the AfD which is considered to be far- right. Yet, that has been ruled out by the CDU which has vowed to maintain the \u201cfirewall\u201d and thus the easiest way to reach the minimum 316 seats would be to bring back the grand-coalition with the SPD. Such a possibility could support the EUR, yet a failure to form a coalition which could force another election could weigh on the common currency<\/p>\n\n\n\n On a monetary level we note the ECB\u2019s interest rate decision which is due to be released next Thursday. The current market expectations for the decision are for the bank to cut rates by 25 basis points, with EUR OIS currently implying a 98.21% probability for such a scenario to materialize. In such an event, the decision to cut rates could weigh on the EUR. However, should the ECB decide to remain on hold it could boost the EUR as it could be perceived as hawkish in nature. Yet with a 98.21% probability, for the ECB to cut rates by 25 basis points, we turn our attention to the banks accompanying statement and ECB President Lagarde\u2019s presser following the decision. Should the accompanying statement be perceived as hawkish or dovish in nature it could aid or weigh on the EUR respectively, with the same possibilities being true for ECB Lagarde\u2019s press conference.<\/p>\n\n\n\n Analyst\u2019s opinion (EUR)<\/p>\n\n\n\n \u201cGermany\u2019s elections have concluded without a hitch. However, we would like to see the composition of the Government and the possible coalition between the SPD and the CDU\/CSU aka the Grand Coalition, yet should the CDU\/CSU break the so called \u2018firewall\u2019 the implications on the EUR could be significant. On another note, we would like to see how Europe will respond to Trump\u2019s claims that he may impose a tariff on the EU. Lastly, we wouldn’t be surprised to see the ECB proceeding with a 25bp cut, as we have constantly stressed that the EU\u2019s economy and in particular Germany requires a boost. Yet a tariff on the EU could upend the ECB\u2019s meticulous planning\u201d<\/em><\/p>\n\n\n\n On a monetary level, in the land of down under, the RBA\u2019s last meeting minutes are set to be released next week. As a reminder the bank cut rates by 25 basis points in their last meeting, with the bank highlighting the uncertain outlook in its accompanying statement. Moreover, RBA Governor Bullock had stated that the bank cannot declare victory on inflation. In turn we wouldn\u2019t be surprised to see the RBA\u2019s last meeting minutes showcase a willingness to garner further information before continuing on their rate cutting path which in turn could be perceived as hawkish in nature.<\/p>\n\n\n\n However, on a macroeconomic level we should note the release of Australia\u2019s CPI rate for January tends to cast some doubt on the concerns of RBA policymakers in regards to the inflation narrative. Specifically, Australia\u2019s CPI rate on a yoy basis for January came in lower than expected at 2.5% versus the expected rate of 2.6% yet remained the same as the prior reading of 2.5%. The lower than expected rate may ease worries about an acceleration of inflationary pressures in the economy, yet it\u2019s failure to ease and remain steady at 2.5% could also imply that the bank still has some work to do. Lastly ,traders may be interested in the release of Australia\u2019s building approvals rate for January next Thursday.<\/p>\n\n\n\n Analyst\u2019s opinion (AUD) <\/p>\n\n\n\n \u201cAlthough the CPI rates failed to showcase the expected acceleration of inflationary pressures in the Australian economy, the CPI rate remaining steady at 2.5% is still a concern. Thus, we wouldn’t be surprised to see RBA policymakers maintain their presumed hawkish tone of refraining from declaring victory against inflation. In turn this could aid the AUD. Yet should financial releases cast doubt on that scenario, it could instead weigh on the AUD\u201d<\/em><\/p>\n\n\n\n On a political level, we must note that US President Trump has nodded that the 25% tariff on Canadian exports to the US which was postponed, appears to be \u201con track\u201d with that potentially occuring on the 4th of March which would be Monday. In turn the possibility of tariffs and a retaliation by Canada, could raise concerns about the true economic strength of the economy. Hence should the tariffs go through, it could impact the CAD.<\/p>\n\n\n\n On a macroeconomic level, for next week we would like to focus on the release of Canada\u2019s employment data for February which is due out on Friday. According to economists the unemployment rate is expected to remain steady at 6.6% and thus attention may turn to the employment change figure. Should the figure come in higher than the prior figure of 76k it may imply a tight labour market and could thus aid the CAD. Whereas a lower figure than 76k could imply a loosening labour market and could instead weight on the Canadian dollar.<\/p>\n\n\n\n Analyst\u2019s opinion (CAD) <\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2025\/02\/image-131.png\")
<\/figure>\n\n\n\nJPY \u2013 Uncertainty over inflation in the Japanese economy?<\/strong><\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/02\/image-132.png\")
<\/figure>\n\n\n\nEUR \u2013 German elections could shake the Euro<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/02\/image-133.png\")
<\/figure>\n\n\n\nAUD \u2013 RBA minutes due out next week<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/02\/image-134.png\")
<\/figure>\n\n\n\nCAD \u2013 Employment data next week<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/02\/image-135.png\")
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