GBP losses continued throughout the day following the weaker-than-expected GDP number in the morning. With equities dropping, this move further exacerbated the generally lower risk sentiment.
USD continued to gain following a slightly better-than-expected monthly retail sales numbers.
JPY was the best performer of the day after the Finance Minister hinted at possible currency intervention.
*Daily move - against G10 rates at 7:30am, 18.11.24
** Indicative rates - interbank rates at 7:30am, 18.11.24
Big week ahead for GBP with the release of CPI numbers on Wednesday morning and retail sales out on Friday.
Headline CPI is expected to be higher at 2.1% following a rise in household energy bills. If this is the case, then it would support the current market expectations that the BoE will likely skip cutting interest rates in December. UK retail sales are also due on Friday.
From Europe, we have final CPI numbers for October and Euro Area Negotiated Wage numbers for Q3. These will give markets an indication of whether the ECB will cut rates by 25bps or 50bps in December.
November PMI numbers for the UK, EU and the US are out on Friday. The current market landscape continues to favour USD over the longer term but, in light of a quiet week for US news and data, there is the potential for recent USD gains to retrace and, as mentioned last week, we feel clients who need to buy USD should use any weakness as an opportunity to hedge against the longer term bullish narrative.
Relative strength on GBPEUR has fizzled out in recent days following the weaker GDP numbers highlighting concerns about the UK economy. It's worth noting the recent underperformance on the EUR hasn’t really filtered through to the currency pair and thus we feel any weak numbers from the UK this week would suggest a lower GBPEUR by the end of the week.
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