17/05/2024
Written by: Ian Morley
Summary:
GBP experienced upward movement across various currencies yesterday, surprising given the absence of clear driving factors. The initial morning gains against JPY tapered off as the day progressed.
Speeches:
Market Insight:
All attention is focused on the release of inflation and growth data from Europe at 10 am. Current market expectations suggest a 0.25% rate cut in June, followed by another 0.25% cut in September. Today’s data could be crucial in potentially shifting the timeline for a second rate cut from September to July. Eurozone growth for the 1st quarter appears stagnant, projected at 0.1%. Later in the day, the focus will be on the Fed’s employment cost index, a key indicator for inflation. Any signs of upward pressure on this index could result in gains for USD.
Analysis:
Inflation in Europe has been on a downward trend since mid-2023, prompting market expectations of an ECB rate cut in June. This trend has also increased speculation that the ECB will cut rates more aggressively than the Bank of England and the Federal Reserve this year. Today’s core CPI is forecasted to decrease further to 2.6%. Any additional declines could accelerate expectations for the ECB’s second rate cut to occur in July.