USD gains continued over Friday with both GBPUSD and EURUSD trading through prior supports and falling to 1-month lows. A stark contrast to the moves we saw post Wednesday's CPI print. USD gains were propelled on Friday after the University of Michigan's 1-year inflation came in higher than expected at 3.3% as well as the market seeking the haven of USD with French political risk causing anxiety in financial markets.
GBPEUR hit a fresh 22-month high early in the day but gains were short-lived with the pair finishing lower on the day. GBP in general had a poor day, perhaps with markets concerned ahead of this week's CPI number and BoE meeting.
*Daily move - against G10 rates at 7:30am, 17.06.24
** Indicative rates - interbank rates at 7:30am, 17.06.24
GBP is firmly in focus this week with the release of CPI on Wednesday morning, Bank of England on Thursday and retail sales and PMI numbers on Friday. Markets are expecting inflation to have moderated in May from April with the obvious risk being that a lower drop could see a dovish tone in the Bank of England meeting on Thursday and the markets moving rate cut expectations from November to August/September.
We also have interest rate decisions from the Swiss National Bank and the Reserve Bank of Australia where neither bank is expected to make any changes on rates but the forward guidance will be key.
USD had a big turnaround last week on the back of a hawkish Fed meeting as well as political risk in France causing markets to seek safe havens. US retail sales (Tues) and PMI (Fri) are the only major data points stateside but we have plenty of Fed speak to digest over the course of the week.
For the EUR, of course, the French elections remain a risk factor and over the weekend, polls showed Marine Le Pen’s National Rally party having a substantial lead, with the left-wing Popular Front second and Macros Renaissance third.
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