Last week unfolded largely as expected, characterised by relatively steady market conditions until Thursday when significant data releases prompted notable movements in currency pairs. Despite a modest uptick in the Pound against the USD on Monday, attributed to the observance of Presidents Day, the currency soon reverted to previous levels. The eagerly awaited PMI figures, particularly in the Eurozone, defied projections, with the services reading hitting the crucial 50 mark for the first time since July 2023. This unexpected turn of events ignited considerable volatility in the EUR/GBP pairing and briefly propelled the Euro to its highest point against the USD for the month, although these gains were largely erased by the day’s end.

Meanwhile, the UK and US PMI results released on the same day portrayed a mixed picture. Despite a brief surge against the USD, the Pound quickly retreated to familiar territory, while the US Dollar capitalized on better-than-expected unemployment claims figures, enjoying a slight uptick in response.

Looking ahead, the upcoming week appears relatively subdued on the data front, with the US poised to take centre stage. Of particular interest are the scheduled releases of consumer confidence figures on Tuesday and Preliminary GDP data on Wednesday. While both metrics serve as key indicators of economic health for the Federal Reserve, prevailing sentiment suggests a continuation of US Dollar strength in the wake of these announcements.

In summary, last week’s currency markets experienced widespread stability amidst relatively calm conditions, driven by in-line data releases. The outlook for the upcoming week leans towards a cautious optimism surrounding the US Dollar, with market participants closely monitoring key economic indicators for further insights into the currency’s trajectory.