GBP to underperform, weakness will be more evident versus EUR – MUFG

EUR/USD slides 0.05% as the week begins, courtesy of broad US Dollar strength, amid choppy trading as traders brace for the Federal Reserve monetary policy decision. At the time of writing, the pair trades at 1.1637 after hitting a daily high of 1.1672.

GBP/USD corrects lower toward 1.3300 on Monday after posting gains in the previous week. The markets adopt a cautious stance ahead of the highly-anticipated Fed meeting, making it difficult for the pair to gather bullish momentum. 

Gold turned south after Wall Street's opening, trading south of $4,200. The US Dollar finds additional legs on a souring mood on Monday as market participants prepare for the upcoming Fed meeting, which will provide key insights into the short-term policy outlook.

The Reserve Bank of Australia is on track to leave the Official Cash Rate unadjusted at 3.6%, following the conclusion of its December monetary policy meeting on Tuesday. The decision will be announced at 03:30 GMT, accompanied by the Monetary Policy Statement. RBA Governor Michele Bullock’s press conference will follow at 04:30 GMT.

This week we get a lot of data releases but the biggie is all those central bank decisions. Canada, Australia and Switzerland are expected to stay on hold, but the Fed is expected to cut.

Bitcoin, Ethereum, and Ripple record a minor recovery on Monday, starting the week on a positive note. The retail demand for major cryptocurrencies remains strong despite outflows from Bitcoin and Ethereum Exchange Traded Funds (ETFs).