On Monday, trading activity was subdued due to a holiday in the US . However, on Tuesday, volatility picked up as better than expected Purchasing Managers’ Index (PMI) data for the UK in February indicated a resilient economy, which could lead to the Bank of England (BoE) announcing higher rates in March. The PMI exceeded the forecast and surpassed the 50 threshold for the first time in months, resulting in a positive impact on the sterling, with GBPUSD rising to 1.2145. On the other hand, the EURUSD remained under pressure following the release of the Manufacturing PMI, which showed a continuation of the downturn in February.
The Federal Open Market Committee (FOMC) meeting minutes released on Wednesday revealed wide support for a quarter-point hike instead of the previously agreed gradual 25 basis point rise, with the aim of achieving the 2% inflation target. The Fed minutes supported the Dollar, and the greenback continued to trade higher against most G10 currencies. Before the meeting minutes, Wall Street experienced its worst day since the start of the year, with the S&P 500 and Dow Jones continuing their losses in the following days. The potential of higher interest rates for the US for longer than expected could put equities under pressure for an extended period.
Gold prices kept trading lower, primarily driven by a stronger US Dollar, with XAUUSD hovering around the 1830 price level over the past week.