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We've had a relatively quiet first half of the week in the foreign exchange market, with a lack of major newsflow leading to rather rangebound trading.

Last week brought some relief on the inflation front on both sides of the Atlantic.

The FX market has been awoken from its Christmas slumber in the past 24 hours or so.

We'd been warning for some time about the large gap between market expectations for future ECB rates and the inflationary reality.

Thursday’s Bank of England announcement delivered mixed messages for market participants.

The Federal Reserve took its first baby steps towards ending its aggressive interest rate hike cycle on Wednesday, although it failed to deliver a clear dovish pivot.

Currencies were thrust out of their recent slumber on Tuesday, as a softer-than-expected US inflation report sent the dollar sharply lower and raised the possibility of a long-awaited dovish pivot from the Federal Reserve at its meeting this evening.

This week’s ECB meeting is set to be an interesting one, as the bank is expected to shift towards a less aggressive tightening stance.

We see a great deal of uncertainty surrounding this Thursday’s highly-anticipated Bank of England meeting, which is likely to lead to heightened volatility in the pound either side of the decision.

Last week’s currency rankings had an unusual couple on top: the Chinese yuan and the Swiss franc.