GBP losses from last Friday continued into the new week as markets continued to digest BoE Ramsden's dovish comments, although worth noting the currency did manage to reclaim some of the initial losses. Both USD and EUR were fairly flat on the day.
*Daily move - against G10 rates at 7:30am, 23.04.24
** Indicative rates - interbank rates at 7:30am, 23.04.24
So much of the talk across our desks is of course focused on the weakness in GBP following the dovish turn from BoE speakers last week, as well as market pricing now reflecting a 60% chance of a June rate cut, and a 100% chance of a cut in August. We saw some key support levels taken out as well across the board, so the question now is whether there is enough conviction from markets for the negative GBP trend to continue. So, we wait to see what today's PMI numbers show, as well as what BoE Pill and Haskel say in the afternoon. From a charting perspective, the GBP index is looking oversold which normally suggests a rebound could be on the cards, but not guaranteed especially if the markets are in the mood for further GBP declines.
PMI numbers today will give the markets a good idea about how economic activity is progressing this year. We can see in the chart below that activity in the UK and US has slowed since the turn of the year, whilst activity in the Europe has continued to improve. The EUR has managed to stay relatively strong, despite the ECB being priced to cut rates first. So should Europe's PMI numbers suggest that growth is slowing, then we could see another reason for the markets to weaken the EUR. As we know GBP has been hit recently on markets pricing an earlier rate cut from the BoE, so we will need to see an uplift in the UK numbers for the currency to garner support off monthly lows.
Our team of currency experts are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer specialised guidance on the best options available to you. Over the last 17 years we’ve helped over a million customers and last year alone processed over £10bn. We’re tried and trusted, and we’re ready to help you.
Have a great day.
