USD: A soft week for the greenback, which had failed to consolidate above the 94.00 level. Expectations that Powell will become the next Fed Chair as opposed to the inflation hawk, Warsh, had slightly pressured the USD at the beginning of the week. FOMC minutes mid-week failed to provide any real fireworks with the council again focusing on concerns over inflation. Friday’s inflation data fell just short of analyst estimates, resulting in the USD to hit 2-week lows after tripping through 93.00.
GBP: Among the best performers of the week, paring most of last week’s declines from 1.34. Reports over the weekend that PM May had been looking to steady the ship with a cabinet reshuffle prompted GBP/USD to break above 1.32. Alongside this, source reports took GBP back to around 1.33 which noted that EU’s Barnier could potentially offer the UK a two-year transition deal to stay within the single market.
EUR: 1.17 firmly held with support emanating from the broadly softer greenback, with a move back towards the mid-1.18. Source reports from the ECB stating that the central bank is considering cutting QE purchases in half (EUR 30bln/month) from January and extending the program until Sep’18. A relatively quiet week for the EUR as focus moves towards the ECB monetary policy decision.