The first full week of the year was not short on volatility, with bond yields in the UK surging beyond 5%. This sharp rise reflects investor concerns about the UK Government’s ability to manage its debt and potential overspending.
As a result, we may see spending cutbacks or additional tax hikes later this year. This sentiment has pushed Sterling to 1.19 against the Euro and 1.22 against the Dollar—both at their lowest levels in quite some time.
Key Market Drivers
US Dollar Strength: The Dollar gained further momentum following stronger-than-expected Non-Farm Payrolls (NFP) data on Friday, underscoring the resilience of the U.S. economy. With this robust performance, the Federal Reserve has little reason to cut interest rates soon, a positive development for USD sellers against both Sterling and the Euro.
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