26/07/2024
Written by: Ian Morley
Summary:
Yesterday’s trading reflected indecision due to a lack of significant market catalysts. GBPUSD attempted to surpass recent 4-week highs, but hesitation towards USD weakness prevailed, given the upcoming barrage of Fed speeches this week and Thursday’s core PCE inflation number. The EUR also exhibited broad strength.
In the UK, shop inflation hit its lowest level since March 2022, with prices rising 2.5% in February compared to 2.9% a year ago.
Speeches:
Fed: Barr
BoE: Ramsden
Market Insight:
With little data released today, attention remains on the upcoming speeches by Fed member Barr and BoE member Ramsden. Comments from them may not heavily influence markets, as investors are awaiting US and EU inflation figures later in the week. The USD started the day weaker, with both GBPUSD and EURUSD showing signs of aiming for recent highs.
Analysis:
BNP Paribas recently joined other institutions in issuing bullish forecasts for GBPEUR. This follows similar sentiments from Bank of America, Credit Agricole, and MUFG, all of whom have raised their end-of-year targets. Factors contributing to potential further gains for GBP include the possibility of the ECB cutting interest rates before the BoE this year, as well as the ongoing widening divergence in the relative economic performance of the UK and Europe.