The Euro lost ground against the Dollar yesterday, on the back of bearish ZEW Economic Sentiment readings from both Germany and the Eurozone as a whole. The German reading which posted 5.1 fell to the lowest level in over a year and a half as the experts become more cautious about the economic outlook, the strong Euro and the fears over a potential trade war begin to have a negative effect.
The Pound strengthened this morning, as UK Average Earnings beat expectations, posting a bullish 2.8%. The boost to Sterling was helped by the Unemployment Rate which also exceeded the market expectations, dropping back down to 4.3% from last month’s uptick. The bullish Labour Data will provide the Bank of England with further support to raise interest rates earlier than originally expected.
Across the pond, the Federal Reserve are expected to raise interest rates for the first time this year, to 1.75%. This will be Jerome Powell’s first meeting as chair of the Fed, so the markets will be watching closely his tone for any indications as to his plans for the coming year. Also released from the Fed is the economic projections which will give the markets an indication as to whether they are planning to raise rates three or four times this year. Hawkish tones and hints of an additional hike, will provide the Dollar with some strength.