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Sterling slips as CPI muddy and G10 peers outperform – Scotiabank

The Pound Sterling (GBP) is weaker against the dollar, underperforming most G10 currencies as markets digest mixed UK inflation data and a modest repricing of Bank of England easing expectations, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Pound under pressure despite improved sentiment signals

"The pound is weak, down 0.3% vs. the USD and underperforming all of the G10 currencies with the exception of CHF."

"Domestic risk remains elevated and markets are digesting the mixed CPI release, offering a marginal surprise on headline (3.4% y/y vs. 3.3% exp) and a marginal disappointment on core (3.2% y/y vs. 3.3% exp). The release has delivered a modest softening in BoE rate expectations, repricing some of the easing that had been priced out over the past week or so."

"UK/US spreads remain soft, and—as with EUR—we note a clear divergence between bearish fundamentals (spreads) and bullish sentiment with a notable rise in risk reversals showing a clear moderation in the premium for protection against GBP weakness."

Euro softens as G10 peers outperform – Scotiabank

The Euro (EUR) is soft, down a fractional 0.1% vs. the US Dollar (USD) as it underperforms all of the G10 currencies with the exception of GBP and CHF and fades a minor portion of Tuesday’s gains, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
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GBP/USD slips near 1.3430 as Trump eases Greenland rhetoric

GBP/USD turns negative on the day following remarks by the US President Donald Trump in Davos who said that he would not use excessive force to get Greenland. At the time of writing, the pair traded at 1.3433, down 0.03%.
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