26/07/2024
Written by: Ian Morley
Summary:
GBP losses from last Friday persisted into the new week as markets continued to digest dovish comments from BoE’s Ramsden. However, the currency did manage to recover some of its initial losses. Both USD and EUR showed relatively flat performance on the day.
Speeches:
Market Insight:
Much of the discussion revolves around the weakness in GBP following the dovish stance from BoE speakers last week. Market pricing now indicates a 60% chance of a rate cut in June and a 100% chance of a cut in August. Key support levels were breached across the board, raising questions about whether there is enough market conviction for the negative GBP trend to persist. Today’s focus lies on PMI numbers and speeches from BoE’s Pill and Haskel in the afternoon. From a charting perspective, the GBP index appears oversold, suggesting a potential rebound, although not guaranteed, particularly if markets lean towards further GBP declines.
Analysis:
Today’s PMI numbers will provide insight into the progress of economic activity this year. Despite expectations of rate cuts from the ECB, the EUR has remained relatively strong. If Europe’s PMI numbers indicate a slowdown in growth, it could provide another reason for the markets to weaken the EUR. With recent pressure on GBP due to expectations of an earlier rate cut from the BoE, an uplift in UK numbers will be crucial for the currency to find support above monthly lows.