As mentioned last week, the only way £-€ was going to see a 0.5% uplift was if UK wage data surprised on the upside. Both came to fruition and the pair is deemed once again favourable, halting a 2-week slide in the meantime.
A word of warning for Sterling sellers; current levels may be more favourable than they seem. In terms of the trading range and historical trend, GBP v EUR is a buy. However, depending on what happens Wednesday & Thursday, it could be a significant 'more to lose than to gain' scenario.
GBP v USD rose 1.3% last week and any jump this big should be considered under any circumstance..
Headline inflation in the UK is expected to fall pretty much to the BoE target of 2% (down from 3.1%) on Wednesday with the core inflation number dropping to 3.7% from 4.2%. If expectations are correct, it all but confirms the start of the UK interest rate cut cycle, set to begin next month.
Lower interest rates are currency negative and GBP could fall 1% from the current position quite easily in the middle of the week. Any deviation from the consensus and GBP could see a small gain as the chances of a June rate cut would shrink (currency positive).
Thursday & Friday could compound further misery for the UK/£ if the PMI's and retail sales figures arrive as forecast.
EUR The Euro-Zone published positive GDP numbers last time out (expected) and are scheduled to produce better PMI data than the UK this week. Such a result will increase the Euro's value versus the Pound, which may already be hurting from the previous days' inflation release.
USD The Dollar regained some recently lost ground versus the Euro last week, but gave away some significant ground against GBP. 1.3% is some loss and over half of that arrived after US PPI was released higher than anticipated. The short-term downtrend could continue up until the middle of the week.
Upcoming Data | Monday 20th May 2024 | N/A
| Tuesday 21st May 2024 | 09:00 US - Treasury Secretary Yellen speech 10:00 EU - Euro-Zone balance of trade 18:00 UK - BoE Governor Bailey speech |
Wednesday 22nd May 2024 | 07:00 EU - Euro-Zone new car registrations 07:00 UK - Inflation rate, core inflation rate & public sector borrowing 09:05 EU - ECB President Lagarde speech 10:30 EU - German 10-year bund auction 12:00 US - Mortgage applications 15:00 US - Existing home sales 19:00 US - FOMC minutes |
| | Thursday 23rd May 2024 | 05:30 EU - Dutch consumer confidence 08:15 EU - French PMI 08:30 EU - German PMI 09:00 EU - Euro-Zone PMI 09:30 UK - PMI 12:30 UK - BoE Pill speech 13:30 US - Initial/continuing jobless claims 14:45 US - PMI 15:00 US - New home sales 15:00 EU - Euro-Zone consumer confidence |
| Friday 24th May 2024 | 00:00 UK - Consumer confidence 07:00 EU - German GDP 07:00 UK - Retail sales 07:45 EU - French business confidence 13:30 US - Durable goods
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