GBP

Sterling has staged an impressive recovery from yesterday’s lows against the dollar gaining 0.5%, to trade at its highest level in over two months in early trading. The dollar has been following its recent familiar pattern and trading in tandem with moves in US bond yields and with the benchmark 10-year treasury bond failing to break above 1.8% on Monday, the US dollar index lost its traction and has weakened against its currency peers. Against the euro, the pound remains steady. Following his meeting with UK foreign Secretary Liz Truss, Jefferey Donaldson, Leader of Northern Ireland’s DUP party, said yesterday that the British government must outline a timetable for how and when changes will be made to the Northern Ireland protocol.

EUR

The euro is consolidating from its bounce amid a broadly weaker dollar ahead of a speech by European Central bank president Christine Lagarde later today. It will be the ECB Head’s first public comments since the Consumer Price Index for the Eurozone rose to 5% in December, but she expected to reiterate her cautious optimism for inflation in the bloc going forward. Along the same lines, earlier this morning the ECB’s chief economist Philip Lane said he expects inflation to fall this year and below the central bank’s target of 2% in 2023.

USD

The dollar has fallen this morning as traders focus on US federal Reserve Bank Chairman Jerome Powell’s testimony before a congressional hearing this afternoon. In his prepared opening remarks released Monday, Powell will pledge to prevent high inflation from becoming entrenched but is expected to make no mention of the path of monetary policy. However, he will take questions from Senators in a bid for a second term and movements in US treasury yields could impact the greenbacks valuation.

Economic Calendar

11.00 EUR ECB’s Lagarde speech
15.00 US Fed’s Jerome Powell testimony