The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
The US dollar initially gained at the start of last week’s session as reports over the possibility of China either slowing of halting its purchase of US Treasury Bonds were refuted by China’s foreign exchange regulator.
USD struggled to hold on to its gains as the week went on however, with the currency beginning to lose ground by Wednesday despite US wholesale inventories data outpacing expectations.
The US dollar saw the majority of its losses on Friday with USD/EUR falling to a three-year low and GBP/USD climbing to its highest levels since the Brexit referendum.
USD’s losses at the tail end of the week were largely driven by data showing a dip in inflation and slowing retail sales in December.
Given USD’s increasing sensitivity to negative data, this week could see the US dollar tumble even further should any of the upcoming economic reports disappoint.
Particular focus is also likely to be paid to a number of speeches from Federal Reserve policy makers this week as investors look to see whether the bank is still on track to hike rates three times in 2018.
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