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

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