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GBP/USD: forecast for January 18-24

By Kira Iukhtenko

Market attention all over the world is now glued to two topics: China and oil. Lack of risk appetite is supporting the US currency versus the risky assets (AUD, NZD, CAD), but limits the upside in pairs with the safe assets (EUR, JPY). This trend is expected to continue until the markets calm down.

Will the Fed hike rates further in March? This is a meaningful question for the market. According to the futures market, the probability is now 40%. However, as the Chinese meltdown continues, the market will not price these expectations in the coming weeks.

US economic calendar for the new week is rather light. Monday is a bank holiday in the US. On Wednesday, watch the December consumer inflation data. Falling oil prices are expected to pull the index into the negative territory. On Thursday, Philly Fed Manufacturing Index will be published. 

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