Market Insight 06-02-2024

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  • Market Insight 06-02-2024


The US dollar surged to new highs after remarks from Fed Powell and better-than-expected ISM services data for January. The likelihood of a rate cut in March plummeted to 0.16%, causing a decline in equities. Despite upbeat UK services PMI figures, the British pound struggled amid overall market caution. GBPUSD breached key support levels, raising the prospect of revisiting November lows. Meanwhile, EURUSD revisited its December low before finding support.


  • The Australian dollar began the day stronger due to a hawkish stance from the RBA, countering rate cut expectations by highlighting inflation risks and the potential for further hikes. GBP is attempting to recover from losses following a report from the British Retail Consortium indicating a slowdown in January retail sales, though still above expectations.
  • The remainder of the day features UK construction PMIs and European retail sales data, but market sentiment is likely to drive FX movements, potentially leading to gains in GBPUSD and EURUSD. China’s President Xi Jinping is scheduled to receive a briefing on financial markets, hinting at possible support measures for the struggling Chinese stock market. European and US equity futures suggest a positive opening, which could weaken the USD in the short term.

Chart Analysis:

Yesterday saw the largest two-day decline in GBPUSD in nearly a year, spurred by robust January job figures, hawkish comments from Fed Powell, and an uptick in ISM services activity. This broke the pair’s sideways trading pattern since mid-January. The mid-December low is expected to provide support ahead of upcoming US inflation data, especially amidst speculation about additional support measures for China’s stock market. Since the beginning of the year, the pair has depreciated by 2%.