North American Summary and Highlights 5 Feb
Overview - GBP was weak after a close BoE vote for unchanged policy, but otherwise the USD saw only modest gains.
European and North American sessions
The USD saw modest gains overall after firming into the close, but was particularly strong versus the GBP. Already under pressure given uncertainty over PM Starmer’s future, the GBP slipped after the BoE meeting delivered a surprisingly close vote of 5-4 for steady policy, raising the risk for a move in March. The ECB left rates as expected but did express concern over the risks of EUR appreciation. GBP/USD fell to 1.3540 from 1.3620 while EUR/GBP rose to .87 from .8660. EUR/USD was unable to sustain a move above 1.18 and ended back at its lows near 1.1780.
US data raised concern over labor market weakness, with the Challenger report showing highest layoffs total for January since 2009, and initial claims up to 231k from 209k, though weather may have played a part in this. Later December’s JOLTS report showed a third straight decline in job openings to the lowest level since 2020. UST yields, equities and oil were all weaker but the USD found support after some early North American slippage, USD/JPY returning to the upper half of its range above 157. Late USD gains saw AUD/USD near its .6940 low and USD/CAD near its 1.37 high after spending most of the session in narrow ranges.