he Whitehall analysis reportedly showed that the UK economy would grow more slowly outside of the European Union than within, regardless of what deal is struck with the block. The report claimed that economic growth over the next 15 years could be as much as 8% lower in the UK than if it had voted to remain a member of the EU, with almost every sector of the economy set to suffer. Unsurprisingly, this claim was later dismissed by government sources.

The US Dollar was also helped on its way against its major peers by a rise in US yields. The benchmark 10-year US yield broke through the 2.7% barrier for the first time since 2014 in one of the first real signs of correlation between FX markets and that of fixed income so far in 2018. Economic data out of the US yesterday was also somewhat supportive of the currency. Personal spending grew 0.4% in December and there was also a welcome upward revision in the November number to 0.8%, its joint second highest increase since 2009. This could potentially point to a firming in consumer spending in the US as it entered into the New Year.

In the Eurozone, European Central Bank member Peter Praet warned of caution over a removal of monetary stimulus in the currency bloc. Praet said that the ECB would only stop buying bonds as part of its quantitative easing programme once it was confident about inflation, while reiterating that the central bank would wait well past the end of purchases before raising rates. This reinforces our call for a rate hike in the Eurozone well into 2019.

Activity should pick up pace in the FX markets today. This afternoon’s German inflation data could give us a decent indication as to the strength of the more significant Eurozone CPI number later in the week. Governor of the Bank of England Mark Carney will also be speaking at 15:30 UK time as investors look for clues as to the possibility of another rate hike in the UK this year.