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GBP v USD closing in on fresh 2024 high

UK & US central banks take centre stage this week..



GBP
To follow the Fed or not?

This is the talk of the town at the moment and the consensus currently is very mixed. Many believe the risk is too high for the BoE to not copy the policy about to be set out by Fed Chair Powell. But others expect to see Central banks play their own game for a while longer. 

Most central banks tend to follow the lead of the worlds most important financial institution as a form of protection. There are many risks involved when choosing to copy the US or not and one is currently at play with exports to the US starting to maybe become to expensive with the £-$ rate so favourable just now.

The market is expecting to see no change from the BoE this week which is priced into the market. The upcoming UK inflation print or a 50bp cut from the Fed may change that and so this week is very much a risk event for Sterling. However, the odds at this stage point to a more positive outcome for the Pound rather than a negative one.

Does fortune favour the brave??




EUR
The ECB made their decision last week on interest rates and so the Euro will be waiting in the wings this time out on the result of the Fed's & BoE's decisions. A 25bp cut arrived (which was expected) and the narrative that followed was that the central bank were in no rush to deliver a cut at the next one.

A slow and steady approach from here would point to a 25bp rate cut per quarter, which if true, underpins the Euro at current levels and raises its safe-haven profile.



USD
Last week, money markets (who are often more wrong than right it has to be said) had the odds of a 50bp rate cut in September by the Fed at 30%. This has now risen to over 60%. Make of that what you will..

What does look more than likely at this stage is the Fed will cut interest rates this week and the BoE will not. This will see £-$ jump to a new recent high. A 50bp rate cut will see a bigger bump in value for £-$ if no BoE rate cut arrives.

So going by these narratives, anyone with GBP v USD exchanges in the pipeline, should sit on your hands. But the market is never that clear cut and so as always think about hedging your bets and prepare for all eventualities.



Expected mid-market ranges for September 17th 2024

gbp
GBP
usd
USD

    $1.3150 - $1.3250    


gbp
GBP
eur
EUR

    €1.1825 - €1.1875    

Upcoming Data
Monday 16th September 2024
N/A



Tuesday 17th September 2024
N/A


Wednesday 18th September 2024
07:00 UK - Core inflation & inflation rates
10:00 EU - Euro-Zone core inflation & inflation rates
12:00 US - Mortgage applications
13:30 US - Building permits & housing starts
19:00 US - Fed interest rate
19:30 US - FOMC press conference


Thursday 19th September 2024
12:00 UK - BoE interest rate decision & MPC meeting
13:30 US - Initial/continuing jobless claims
15:00 US - Existing home sales
21:30 US - Fed balance sheet




Friday 20th September 2024

00:00 UK - Consumer confidence
07:00 UK - Retail sales & public borrowing
07:00 EU - German PPI
15:00 EU - Euro-Zone consumer confidence
16:00 EU - ECB President Lagarde speech