US interest rate decision this week, France downgrade hits the market

GBP: Thursday sees the UK announce interest rates - even though the market expects NO change, the speeches and forward guidance will be closely watched. Tomorrow we have essential employment data and Wednesday’s Consumer Inflation data means that the UK has a full and busy week ahead.

GBP/USD gained due to a much weaker USD with GBP/USD breaking through 1.3600 after weeks of trying.
GBP/EUR remains steady above 1.1550 at 1-months highs.

USD: USD opens the week on a weak footing ahead of the major announcement of interest rates on Wednesday evening. Although expecting a 0.25% cut to be announced this week, the market is pricing a 68% probability of 2 more 0.25% cuts before the end of 2025. This is pressuring the USD.

This weeks speech from Chairman Powell of the Fed is the most impactful of 2025 - markets will be on high alert.

EURO:  Even as EUR takes a hit after France’s downgrade, the USD is weakening at a faster rate, keeping EUR/USD rising. On Wednesday, the ECB President makes a speech but is unlikely to deviate from pervious guidance on rates and the economy.

CAD: Wednesday’s interest rate decision and speeches will give direction to the currency, after a very weak year for the Canadian currency - EUR/CAD has moved from 1.4800 to 1.6250 since January.

China: Monday’s data was weaker across the board, from Retails Sales to Investment spending, suggesting a weakening economy. This suggests that the nation will have to rely on infrastructure spending to reach the growth target of 5%.