Last week, the spotlight was primarily on the Federal Reserve (Fed) as markets anticipated signals of a potential interest rate cut. As expected, the Fed adopted a dovish stance, with Chair Jerome Powell confirming a rate decrease set for Wednesday evening, leading to a decline in the USD. However, towards the end of the week, the USD experienced a reversal following strong retail sales figures for November, indicating robust performance in the US consumer sector.

Attention then turned to the Swiss National Bank (SNB), the Bank of England (BOE), and the European Central Bank (ECB) on Thursday. Despite maintaining interest rates at their existing levels, the decisions seemed to lean more towards the hawkish side, as none of the central banks made references to potential rate cuts, in contrast to the Fed’s stance the previous day. This contributed to a boost in the GBP, EUR, and CHF.

The BOE opted to keep interest rates steady at 5.25%, and the Monetary Policy Committee (MPC) rate vote resulted in a 6-3 decision, contrary to predictions of a 7-2 decision. This was perceived as hawkish by the market, even though the UK economy is facing challenges. Consequently, the GBP saw gains, largely driven by USD weakness. The ECB maintained rates at 4.50%, 4.75%, and 4.00%, while the SNB left rates unchanged at 1.75%.