European Summary and Highlights 21 Dec

European FX trading only saw the JPY lose some ground, but not driven by news.  Flows in thin pre-Christmas conditions were the key issue.  USD sentiment is neutral to mildly bearish.  Fed officials pushing back against early cuts is a reason for consolidation before new data is seen in the new year (e.g. NFP Jan 5), but end of year flows are expected to produce some selling. 
GBP has stabilised against the EUR, but the tone remains mild negative with Wednesday’a much weaker than expected UK CPI data having prompted the money market to price in close to six 25bps rate cuts in 2024.  Traders feel that GBP can drift out versus EUR, though some also note Thursday comments by ECB De Guindos suggesting rate cuts can only come when inflation is heading “towards” 2%.