![\"\"](\"\/wp-content\/uploads\/2025\/01\/image-129.png\")
<\/figure>\n\n\n\nGBP \u2013 BoE decision next week<\/h2>\n\n\n\n
The BoE\u2019s interest rate decision is set to occur next week, with the majority of market of market participants currently anticipating the bank to cut rates by 25 basis points, with GBP OIS currently implying an 85.4% probability for such a scenario to materialize. In turn, we would turn our attention to the bank\u2019s accompanying statement in which should the BoE reference measures to support economic growth, it may be perceived as dovish in nature which could weigh on the pound. On the other hand, should the BoE imply that they may withhold from further cutting rates in the near future, it may aid the GBP.<\/p>\n\n\n\n
On a macroeconomic level, we note that it was a relatively quiet week for pound traders with no major financial releases stemming from the UK. For next week, we would like to note the release of the UK\u2019s manufacturing PMI figure for January which is set to be released on Monday. The prior figure came in at 48.2 implying a contraction in the UK manufacturing sector. As such, should the figure showcase an improvement in the manufacturing sector, either in the form of a smaller contraction or entering into expansionary territory, it could provide support for the GBP. On the other hand, should it showcase a widening contraction it could weigh on the pound.<\/p>\n\n\n\n
Analyst\u2019s opinion (GBP)<\/p>\n\n\n\n
\u201cIn the coming week, we look forward to the BoE\u2019s rate decision in which the bank is widely expected to cut rates by 25bp. In our view, we would not be surprised to see the bank cutting rates by 25 basis points, with the accompanying statement potentially being relatively dovish in nature. Moreover, at the same time we would not be surprised to see some concern from policy\u201d<\/p>\n\n\n\n On a monetary level, we would like to discuss the recent comments made by BOJ Deputy Governor Ryozo Himino. The BOJ Deputy Governor stated per Bloomberg that \u201cLooking ahead, it depends on the economy, prices and financial circumstances, but if our economic and price outlooks are realized, we\u2019ll hike rates accordingly\u201d. Essentially, it appears that the Deputy Governor\u2019s comments are hawkish in nature and thus should further policymakers re-iterate the hawkish remarks, it could aid the JPY.<\/p>\n\n\n\n On a macroeconomic level, we highlight the acceleration of the BOJ Core CPI rates for January. The release highlighted the resilience of inflationary pressures in the Japanese economy which could further support the aforementioned comments made by BOJ Deputy Governor Ryozo. Furthermore, the release of the Tokyo CPI rates on a YoY basis for January showcased an acceleration of inflationary pressures in the economy, hence validating the aforementioned BOJ Core CPI rates. Overall, the financial releases could increase pressure on the BOJ to adopt a more hawkish tone, which in turn could aid the JPY.<\/p>\n\n\n\n Analyst\u2019s opinion (JPY)<\/p>\n\n\n\n \u201cThe BOJ continues to be poised to continue hiking rates during the year, during a period where other central banks are expected to cut rates. In our view, with the BOJ seemingly poised for future rate hikes, we would not be surprised to see the JPY strengthening and thus should other policymakers re-iterate hawkish remarks it could further aid the Yen\u201d<\/p>\n\n\n\n On a monetary level, we highlight ECB\u2019s interest rate decision which occurred yesterday. The bank cut interest rates by 25 basis points, as was widely expected by market participants. In the bank\u2019s accompanying statement, it was stated that \u201cMost measures of underlying inflation suggest that inflation will settle at around the target on a sustained basis\u201d, implying that the bank has some leeway should they wish to continue cutting rates in the future. Moreover, during the post-decision press conference, ECB President Lagarde stated that the euro-area economy \u201cis set to remain weak in the near term\u201d. In turn, this may be perceived as dovish in nature, with the ECB President potentially implying that the bank may continue on their rate-cutting path, which may weigh on the common currency.<\/p>\n\n\n\n On a macroeconomic level, the euro-economy is not looking good either.w are not looking that good either. Specifically, France\u2019s, Germany\u2019s and the Zone\u2019s preliminary GDP rates for Q4 all came in lower than expected, with Germany\u2019s economy remaining in contraction territory. The economic resilience of the Zone and the major economies in it, continue to be troubling and should the financial releases continue to paint a dire picture, it could weigh on the EUR. For next week, we would like to point our sights on the Eurozone\u2019s preliminary HICP rate for January. Should the HICP rate showcase an acceleration of inflationary measures, it could potentially aid the EUR, as the bank may need pump the breaks on their rate-cutting approach. Yet, with the economic situation in the Zone, it may spark concerns about a euro-area recession which in itself could weigh on the common currency instead. Lastly, should the HICP rates showcase easing inflationary pressures, then it could validate the ECB\u2019s rate cutting approach which in turn could weigh on the EUR.<\/p>\n\n\n\n Analyst\u2019s opinion (EUR)<\/p>\n\n\n\n \u201cThe Eurozone\u2019s economic situation continues to be in trouble, as showcased by the preliminary GDP rates for Q4 which were released this week. In our view, the ECB may have no other option but to continue cutting rates should the economic situation worsen. However, should inflationary pressures resurface or even accelerate and thus cast doubt on the bank\u2019s 2% inflation target being sustainably achieved, the EUR could enter a new realm of uncertainty and volatility\u201d<\/p>\n\n\n\n On a macroeconomic level, we note the release of Australia\u2019s CPI rates for Q4 2024, which came in lower than expected. The lower-than-expected inflation print, implies that inflationary pressures in the Australian economy may be easing. In turn, easing inflationary pressures may increase pressure on the RBA to begin cutting rates in their next meeting and could thus weigh on the Aussie. For next week, of interest to Aussie traders may be the release of Australia\u2019s trade balance figure for December which is due out on Thursday. An improvement of the trade balance figure could aid the AUD and vice versa.<\/p>\n\n\n\n On a fundamental level given the close economic ties with China, of interest to Aussie traders may also be the release of China\u2019s Caixin manufacturing PMI figure for January which is expected to remain steady at 50.5. Such a scenario could aid the Aussie, as a continued expansion of China\u2019s manufacturing sector, could imply an increase in demand for raw materials stemming from Australia. On the other hand, should the figure come in lower than expected and imply a lower-than-expected expansion or perhaps even a contraction of the manufacturing sector, it could weigh on the AUD.<\/p>\n\n\n\n Analyst\u2019s opinion (AUD)<\/p>\n\n\n\n \u201cThe lower-than-expected CPI rates may be the justification the RBA needs to cut interest rates in their next meeting. As such, we would not be surprised to see RBA policymakers potentially hinting to a rate cut in their next meeting in February, which in turn could weigh on the AUD. Moreover, we are concerned about the potential tit-for-tat tariffs that may be imposed by the US and China, which could inadvertently hinder the Australian economy.\u201d<\/p>\n\n\n\n On a monetary level, we note the decision by the Bank of Canada earlier on this week, in which the bank cut interest rates by 25 basis points, as was widely expected. In the bank\u2019s accompanying statement, it was stated that \u201cA broad range of indicators, including surveys of inflation expectations and the distribution of price changes among components of the CPI, suggests that underlying inflation is close to 2%.\u201d Essentially implying that the bank is on track for its 2% inflation target and could thus continue cutting interest rates, which may weigh on the Loonie. However, of interest was also another comment in the accompanying statement, which tended to showcase that BoC policymakers have taken note of the possibility of tariffs being imposed by the US. Specifically, it was stated that \u201ca protracted trade conflict would most likely lead to weaker GDP and higher prices in Canada.\u201d This may be of concern, as a weaker economy could lead to a looser labour market, whereas higher prices could imply an increase in inflationary pressures as well.<\/p>\n\n\n\n On a macroeconomic level, we note that President Trump has threatened tariffs on Canadian exports to the US of approximately 25%, which may come into effect on the 1st of February which is tomorrow. In such a scenario, it could weaken the Canadian economy as mentioned by the BoC and could thus weigh on the Loonie. For next week traders may be interested in the release of Canada\u2019s employment data which is due out next Friday. A loosening labour market could weigh on the CAD and vice versa.<\/p>\n\n\n\n On a fundamental level, given Canada\u2019s status as an oil exporting nation, the continued decline in oil prices over the past week may have also weigh on the CAD.<\/p>\n\n\n\n Analyst\u2019s opinion (CAD)<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2025\/01\/image-130.png\")
<\/figure>\n\n\n\nJPY \u2013 BoJ on track for more rate hikes?<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/01\/image-131.png\")
<\/figure>\n\n\n\nEUR \u2013 ECB cuts rates as expected<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/01\/image-132.png\")
<\/figure>\n\n\n\nAUD \u2013 CPI rates showcase easing inflationary pressures<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/01\/image-133.png\")
<\/figure>\n\n\n\nCAD \u2013 BoC cuts by 25bp as expected<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/01\/image-134.png\")
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