The GBP/USD currency pair rebounded in positive territory above 1.2450 on Friday after experiencing a decline on Thursday. Meanwhile, in a significant monetary policy move, the Czech National Bank (CNB) reduced its interest rates during a recent meeting. The main rate was lowered to 3.75% after all seven board members unanimously voted for a 25-basis-point cut. The EUR/USD pair also witnessed small recovery gains near 1.0400 as the US Dollar maintained resilience amidst cautious investor sentiment.
The US Dollar faced challenges in gaining strength against its rivals as investors awaited crucial US Nonfarm Payrolls data. Despite this, the dollar held its ground, buoyed by trade war fears that acted as a tailwind for the safe-haven XAU/USD pair. Additionally, expectations of a Federal Reserve rate cut and subdued demand for the USD provided further support to bullion prices.
In the Central and Eastern European region, several countries reported December retail sales growth figures over the last couple of days. Czechia, Romania, and Slovakia exhibited robust performance with year-on-year growth rates of 6.2%, 7.8%, and 10.1% respectively. Conversely, Hungary's retail sector barely expanded, registering a mere 0.1% growth in December.
In Poland, Governor Glapinski stated that there is currently no need to alter the policy rate as inflation remains high. CEE currencies have been on an upward trend, with the EURHUF exchange rate moving visibly down to 404. Long-term yields in the region's countries continued their downward trajectory, reflecting broader economic trends.
The CNB anticipates implementing two additional rate cuts in 2024, one in August and another in November, with a further reduction expected in 2025. This strategic move aims to align the country's monetary policy with evolving economic conditions.