GBP

On Friday it was announced that the UK economy had advanced 7.5% in 2021, the highest GDP growth rate since World War II.

Figures for December were expected to decline due to the Omicron variant and government guidance during the holiday period. However this did little to affect the overall growth for the year.

The GDP growth boded well for the pound, especially against the euro. Sterling was back trading at weekly highs, regaining its losses after hawkish comments last week from the President of the European Central Bank Christine Lagarde.

USD

As for the dollar, higher than expected US Consumer Price Index (CPI) readings spurred fears that the Federal Reserve may tighten monetary policy more aggressively in the months to come.

The CPI hit a fresh four decade high of 7.5%, compared to a 7.3% estimate. The core reading, which strips volatile food and energy items, came in at 6% in January, compared to a 5.9% estimate.

This suggests that price pressures are most likely higher than the Fed had anticipated, urging it to raise interest rates faster and to end its asset purchasing program sooner at the next policy meeting.

Key announcements

16:30 – European Central Bank President Lagarde’s speech