Pound Falls on Rate Cut Prospects

GBP

The British pound kicked-off the week on a weaker note following dovish comments from Bank of England policymaker. Gertjan Vlieghe stated over the weekend that he is likely voting for an interest rate cut in the coming meeting if the economic data failed to surprise to the upside. The last two monetary policy committee meeting, policymakers voted 7 to 2 to leave interest rates unchanged. On the other hand, the CME BoE Watch Tool currently shows a probability of an interest rate cut in the second half of 2020. The GBPUSD dropped to a two-week low of $1.2992, the GBPJPY tumbled to 142.45, and the EURGBP edged higher to 0.8563.

USD

The dollar index, which measures the greenback against a basket of major currencies, drifted lower to 97.30 following softer-than-expected US jobs report. The US economy added only 145 thousand jobs in December, missing estimates of 164 thousand, and the Average Hourly Earnings rose by only 0.1% versus a consensus of 0.3%. However, unemployment and participation rates remained unchanged at 3.5% and 63.2%, respectively. On the other hand, the preparations for the signing of phase 1 of the trade deal in Washington this week trimmed dollar losses. Currently, the USDJPY is trading at 109.67, slightly short from logging an eight-month high supported by easing geopolitical concerns, while the EURUSD is trading above $1.1120.

Metals

Gold prices slid during the Asian session erasing gains earned on dovish US jobs data. The price of a gold ounce rose to an upside resistance of $1562 on Friday, but failed to hold gains and drifted lower to $1551 weighed down by easing geopolitical tensions which supported the flow to riskier assets. The price of a silver ounce fell to $17.96, and palladium declined to $2108.

Oil

Oil prices continued to trade in a tight range near a one-month low awaiting fresh fundamental drivers. The West Texas Intermediate crude futures hovered near $59 per barrel, and Brent futures traded below $65 per barrel.

Major Economic Events

 
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