Last week, we parted company on the day of Donald TRUMP's inauguration. We were expecting strong initial decisions, notably on border tariffs, which were to be rapidly increased in the face of China, Canada and Europe. In the end, the announcements were more moderate, even if the rhetoric suggests that Europe and China can expect difficult days ahead in trade with the United States. Moreover, while the Federal Reserve continues to fight against persistently high inflation, notably by limiting rate hikes, Donald TRUMP is vehemently advocating a much faster rate cut.

In this context, after a rather favorable start to the year for the USD, with a low peak at 1.0180 (a first in 18 months), we were back above 1.0500 for a few hours on Friday. The EUR's recovery was also bolstered by a FLASH PMI (manufacturing purchasing managers' index) that came out much more optimistic than last month in Europe and Germany.

As January draws to a close, sterling is consolidating its gains of recent months, thanks to data showing that the economy outperformed expectations in January. The Bank of England is expected to cut its key rates by 25 bps in February, but is unlikely to accelerate this downward trend: the EURGBP is likely to remain below 0.8500, having glimpsed 0.8250 just after Donald TRUMP's election.