UK: Weekly FX Market Update 15 April

CalendarApril 15, 2024
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GBP
  • Despite the UK economy growing for a second successive month, post a shallow recession, the good news wasn’t enough to push GBPUSD higher.

  • However, sterling took advantage of a weaker euro with GBPEUR moving higher.

  • UK employment data is released on Tuesday, UK CPI on Wednesday and UK Retail sales rounds the week off on Friday.

  • BoE Governor Bailey speaks Wednesday evening. Will he continue his recent dovish theme, weakening the pound?

EUR
  • ECB President Lagarde thinks that Eurozone inflation will ‘fluctuate’ around current levels, before reaching its 2% target in mid-2025, leaving her uncertain as to the path for interest rates.

  • However, ECB Board member Kazaks thinks June will see the first rate cut ‘if nothing changes’, whilst support for an upcoming rate cut appears to come from ECB Board member Stournaras, who said that ‘now is the time to diverge from the Fed’.

  • The dovish comments about from ECB members were enough to push EURUSD below support at 1.0695, with Bloomberg reporting that some analysts are now forecasting parity for EURUSD.

  • With no Eurozone top tier data released this week, will EURUSD continue its move lower?

USD
  • US CPI came in ‘hot’ again at 3.5% rather than falling.

  • This news forced the market to push their expectations for US interest rate cuts from July to November, with the dollar strengthening across the board, with the US dollar Index gaining by over 2% on the week.

  • Monday sees the release of US retail sales and FOMC Mester speaks on Wednesday. Will she echo Richmond Fed President Barkin, who said that the Fed ‘is not where we want to be on inflation’ and Boston Fed President Collins who sees ‘about two rate cuts this year'? If so, we could see futher USD strength.


Main events for this week:

Mon Apr 15

13:30 USD Retail Sales/Empire State manufacturing Index

Tue Apr 16

07:00 GBP Average Earnings/Claimant Count Change

13:30 CAD CPI

14:15 USD Industrial Production

Wed Apr 17

07:00 GBP CPI

17:00 GBP BoE Bailey Speaks

22:30 USD FOMC Mester Speaks

Thu Apr 18

02:30 AUD Employment Data

13:30 Unemployment Claims

Fri Apr 19

07:00 GBP Retail Sales

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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