UK: Weekly FX Market Update 8 April

CalendarApril 8, 2024
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GBP
  • The pound staged a minor recovery last week; however, it wasn’t due to positive data from the UK but rather after weaker-than-expected US PMI data, as well as lower-than-expected Eurozone annual CPI at 2.4%.

  • This Friday, UK Monthly GDP will be released with the market expecting growth of 0.1% after last month’s 0.2% gain.

  • MPC Breeden and Greene will both speak this week, possibly illuminating the BoE’s thoughts on the next interest rate move.

EUR
  • Inflation is approaching the ECB’s 2% target, and Bloomberg reports that the ECB Board members appear to be signalling a 0.25% rate cut in June.

  • Interestingly, previous interest rate hawk Holzmann said that the ECB could possibly cut rates before the Federal Reserve.

  • With Eurozone inflation lower than US inflation and the US economy outperforming the Eurozone economy, there is credibility for the ECB cutting first.

  • The ECB will meet on Thursday to set interest rate policy, with Mme Lagarde holding a press conference afterwards. Will she agree with the market that a rate cut in June heralds up to four rate cuts in 2024?

USD
  • Non-Farm Payrolls again showed a strong labour market, however, with average hourly earnings moving ‘sideways’, does the Fed need to cut rates in June? The US dollar stayed supported last week.

  • Signs of a potential shift in rhetoric from the Federal Reserve came in the form of comments from San Francisco Fed President Daly, who said that the Fed’s predictions of 3 rate cuts were ‘not a promise’.

  • Minneapolis Fed President Kashkari said that if inflation readings continued to move sideways, he would question whether the Fed needs to cut rates at all this year.

  • Bank of America added that if the Fed didn’t cut rates this year, they could see USDJPY at 160.00 and EURUSD at parity.

  • US CPI and FOMC meeting minutes could be the main highlights this week. Could another sideways inflation reading on Wednesday encourage US dollar strength?


Main events for this week:

Mon Apr 8

09:30 EUR Sentix Investor Confidence

16:15 CHF SNB Chair Jordan Speaks

16:30 GBP MPC Breeden Speaks

Tue Apr 9

00:01 GBP BRC Retail Sales Monitor

Wed Apr 10

03:00 NZD RBNZ Official Cash Rate

13:30 USD CPI

14:45 CAD BoC Rate Decision/Policy Report/Statement

15:30 CAD BoE Press Conference

19:00 USD FOMC Meeting Minutes

Thu Apr 11

13:15 EUR ECB Rate Decision/Statement

13:30 USD PPI

13:45 EUR ECB Press Conference

19:00 GBP MPC Greene Speaks

Fri Apr 12

07:00 GBP GDP/Ind Production/Manu Production/Goods Trade Balance

15:00 USD Prelim UoM Consumer Sentiment/Inflation Expectations

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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