Sterling fell in European trade on Tuesday against a basket of major rivals, on track for the first loss in six days against the dollar away from three-week highs on profit-taking.

There are no important UK data this week that could change the odds of future UK interest rates, with investors focusing on US data released this week. 

GBP/USD

GBP/USD fell 0.1% to 1.2674, with a session-high at 1.2688, after closing up 0.1% on Monday, the fifth profit in a row, hitting a three-week high at 1.2710. 

UK Rates

Recent UK and inflation data is pointing to a likely UK rate cut in May, skipping March and April.

There’s less than a 15% chance for a Bank of England interest rate cut in March, with an over 50% chance for such a cut in May. 

Traders now expect 71 basis points on average in UK rate cuts this year, down from 134 basis points in previous forecasts. 

Bailey

Bank of England Governor Andrew Bailey said in recent remarks the BOE might not wait for 2% inflation before cutting interest rates, noting that the UK economy has already exited its recession. 

US Rates

Markets are now expecting a 2.5% chance for a Federal Reserve March rate cut, and a 20% chance for a May rate cut, and a 64% chance for a June cut. 

Now investors  are waiting for a basket of important US data later this week, including GDP growth, unemployment claims and personal spending data, to gauge the likely path ahead for policies. 

Solar energy operations and development expanded in recent years after decades of investments in sustainable energy sources, which lead to new cutting-edge solar panel technologies, with the pace only picking up, led by China and the US.

The International Energy Agency expects sustainable energy sources to contribute at least 80% of all new energy requirements in 2030, with solar energy alone accounting for half the increase. 

Indeed, the report expects the global manufacturing capacity to reach 1200 gigawatts of solar panels yearly by 2030. It should be noted that using only 800 gigawatts of solar energy by 2030 would reduce China’s coal reliance by 20%, with a 25% coal usage reduction in Latin America, Africa, and the Middle East. 

Solar energy investments spiked in the last decade, with global solar energy unit production expected to rise from 640 gigawatts in 2022 to 1200 gigawatts in the medium term. 

Currently, five countries dominate the industry, China, Vietnam, India, Malaysia, and Thailand, with China alone accounting for 80% of global manufacturing capacity. 

Nextracker is a company that tracks progress in solar energy projects, with CEO Dan Sugar stating that solar energy capacity is on track to double in size every two to three years as demand spikes inside and outside the US. 

Overall, the company expects the solar energy market to experience a compounded yearly growth of 26% in the next five years, and could even be the main source of electricity in the US by the next decade. 

Simultaneously, China is leading the world when it comes to solar energy, with both wind and solar energy sources surpassing coal stations this year in their energy production in China, with the government expecting wind and solar to account for 40% of total electricity production by the end of the year.

Copper prices fell on Monday as the dollar gained ground ahead of major economic data, while copper inventores surged in China, the world’s largest metals consumer.

Copper three-month futures at the London Metals Exchange fell 0.5% to $8529 a tonne, while copper March futures fell 0.4% at the Shanghai Futures exchange to 68990 yuan a tonne. 

The dollar was up on Monday ahead of a week filled with important data, with industrial metals hurting usually from the stronger dollar as they become costlier to holders of non-dollar currencies.

Investors are now focused on important inflation data from the US, Japan, and Europe to gauge the likely path ahead for monetary policies. 

Earlier data showed copper inventories rose in China, hurting prices, as January production rose past estimates, while demand tapered off.

Copper inventories at SHFE CU-STX-SGH rose to 181,323 tonnes following the Chinese new year holiday, hitting a year high.

However, demand didn’t rise after the holiday, in turn weakening prices. 

Friday data also showed new home prices in China continued to decline in January despite government measures to restore confidence in the real estate sector. 

Aluminum prices rose 0.3% at the London Metals Exchange to $2186 a tonne, while nickel lost 1.3% to $17,265, while zinc rose 0.3% to $2412, as lead lost 0.4% to $2087, while tin lost 0.5% to $26,225 a tonne. 

Otherwise, the dollar index fell 0.1% as of 17:10 GMT to 103.7, with a session-high at 104.02, and a low at 103.7. 

In American trade, copper futures due in May fell 1.5% to $3.84 a pound as of 17:04 GMT. 

International benchmark Brent rose in American trade on Monday, holding above two-week lows as the dollar lost ground.

Prices are under pressure from renewed concerns about global demand due to prospects of global central banks maintaining high interest rates for an extended duration this year.

Prices 

Brent rose 0.4% to $81.95 a barrel, with a February 15 low at $81.03. 

Brent lost 2.1% on Friday, the first loss in three days on profit-taking off three-week highs at $83.92. 

The Dollar

The dollar index fell 0.2% on Monday, resuming losses near three-week lows against a basket of major rivals.

The decline comes as traders favor the pound and euro following bullish remarks for ECB and Bank of England officials. 

A weaker dollar underpins greenback-denominated commodities as they become cheaper to holders of other currencies. 

Global Demand 

It’s likely that central banks in the US, UK, and Europe will maintain rates at historic highs for many more months, which could hurt growth and weaken fuel demand, which bodes negatively for oil prices.