UK: Weekly FX Market Update 13 May

CalendarMay 13, 2024
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GBP
  • Back with a bang! The UK economy jumps out of recession with the strongest growth reading since covid. However, despite this good new, sterling was unmoved.

  • Could the culprit for the lack of sterling strength be due to the Bank of England, who produced a ‘dovish hold’ last week?

  • Despite the BoE reiterating that ‘monetary policy needs to be restrictive for an extended period of time’, money markets now give a 58% chance of a June rate cut and 100% likelihood for August.

  • Average earnings data is released on Tuesday. Will this help clarify the path for interest rates?

EUR
  • A lack of Eurozone data left the euro pushed around by other currency themes last week.

  • ECB Board Member De Guindos said, ‘we are not Fed dependent’, continuing to keep the door open for a June rate cut from the ECB.

  • No data from the Eurozone again this week. Will US CPI be the main focus?

USD
  • US unemployment claims jumped higher last week, prompting a weaker US dollar as investors concluded a US rate cut could be brought forward from November to September.

  • Annual US CPI on Wednesday may be the highlight of the week. Will it slip lower to 3.4% from April’s 3.5% release? Or squeeze higher and encourage US dollar buying again?

Main events for this week:

Mon May 13

17:45 CHF SNB Chair Jordan Speaks

Tue May 14

07:00 GBP Claimant Count Change/Average Earnings

13:30 USD Producer Price Index

15:00 USD Fed Chair Powell Speaks

Wed May 15

02:30 AUD Wage Price Index

13:30 USD CPI/Retail Sales/Empire State Manufacturing Index

Thu May 16

00:50 JPY Preliminary GDP

02:30 AUD Employment Data

13:30 USD Unemployment Claims

14:15 USD Industrial Production

Fri May 17

No Top Tier Data

Author

Trevor Charsley

Trevor Charsley

Senior Market Strategist

Trevor has over 25 years' trading and sales experience. He produces regular market and technical analysis as well as help with the structure and management of FX hedging policies. Trevor is often listed among the top "currency forecaster on Bloomberg".

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