26/07/2024
Written by: Ian Morley
Summary:
PMI numbers from the US unexpectedly rose in May, reaching the highest levels since April 2022. This prompted markets to delay expectations for the Fed to cut interest rates this year, resulting in a stronger USD across the board. In contrast, UK PMI numbers were lower than expected, and the EUR faced disappointment from higher PMI numbers and increased Q1 wage growth. Consequently, the GBPEUR slipped from near-2024 highs.
Speeches:
Market Insight:
Discussions among clients continue to centre on the impact of the upcoming election on GBP. So far, market reaction has been subdued, with Labour clearly leading in opinion polls. Both frontrunners are not proposing any significant changes in fiscal policy. It’s still early, and the situation may evolve, but for now, GBP movements are likely to be influenced by interest rate expectations and economic performance.
This morning’s UK retail sales were disappointing, showing a 3% drop year-on-year in April, with March’s numbers also revised lower. Initial GBP losses have moderated. Meanwhile, USD gains continue following yesterday’s PMI numbers and ahead of today’s University of Michigan numbers.