UK: Weekly FX Market Update 29 April

April 29, 2024

As the market considers the impact of this weeks UK local elections, the pound swooned lower.
GBPUSD was later supported by US dollar sellers as investors considered a fast slowdown in US GDP.
This week, the pound could be influenced by the US dollar again this week, with the Fed setting interest rates on Wednesday and the US jobs report release on Friday.
If the local election results on 2nd May is a disaster for the Tories, will the PM be forced into calling an early general election?

As Eurozone PMI data points to a slow economic recovery, the euro moved higher.
A lively debate regarding interest rates is ensuing at the ECB.
Greek Stournaras considers four rate cuts are possible, whilst Estonia's Muller says that ‘we certainly don’t have to lower rates at every subsequent (to June) meeting’.
Eurozone Flash Estimate CPI is released on Tuesday. Will it continue to show weakness and fall below April’s 2.4%, or be like US inflation and start to bounce higher?

Last weeks data showed a marked slowdown in US GDP and a concerning continued strength in US inflation.
After gaining 5% since March, the US Dollar index gave back nearly 1% last week on this unpleasant economic data.
The market currently expects no change from the Fed when it sets rates on Wednesday, but will the statement and press conference allude to rate hikes to bear down on inflation or rate cuts to support the economy?

Main events for this week:

Mon Apr 29

07:00 EUR German Prelim CPI

Tue Apr 30

10:00 EUR CPI Flash Estimate

13:30 CAD GDP

13:30 USD Employment Cost Index

15:00 USD Consumer Confidence

Wed May 1

15:00 USD ISM Manufacturing PMI

19:00 USD FOMC Int Rate Decision/Statement

19:30 USD FOMC Press Conference

Thu May 2

All Day UK Local Elections

07:30 CHF CPI

13:30 USD Unemployment Claims

Fri May 3

13:30 USD Average Hourly Earnings/Non-Farm Employment Change/Unemplpyment Rate

15:00 USD ISM Services PMI

Author