26/07/2024
Written by: Ian Morley
Summary:
In the comparison of GBP against G10 currencies, market activity remained subdued, though there were indications of USD weakness, particularly with GBPUSD testing Thursday’s peak. ECB officials Lagarde and Muller expressed interest in reviewing Q1 wage data before considering interest rate adjustments, alongside a slight uptick in the ECB’s 1-year CPI projections to 3.3%.
Speeches:
Key speeches included ECB figures Vujcic, Lagarde, and Stournaras, as well as BoE representatives Breedon and Pill.
Market Insight:
The week is expected to remain relatively calm until the release of Q4 GDP revisions from the US on Wednesday. Market sentiment has been positive following Nvidia’s earnings, potentially extending with the GDP revisions. The core PCE inflation figures, likely to show an increase in line with recent US inflation trends, may reinforce calls within the Fed to postpone rate cuts.
A focus will be on GBPEUR dynamics, with EU inflation data on Friday potentially influencing ECB rate decisions compared to the BoE. Expectations are for core inflation to ease to 2.9%.
Analysis:
Illustrating market optimism, the correlation between treasury yields and equity performance has been strong, indicating confidence in the global economy. This risk-on sentiment led to the USD experiencing its first negative week of 2024, ahead of key inflation and GDP data releases.