Mixed Data Released
Daily Currency Update
The last week has seen Dollar strength vs Sterling and the Euro with data releases showing the UK and Europe’s economies slowing while activity in the US remains reasonably robust. This will likely underpin positive sentiment for the Dollar before the Federal Reserve’s interest rate decision in the US next Wednesday 20th.Key Movers
In the UK, fears of a stagnating economy are growing after a weaker-than-expected GDP report was released yesterday. Interestingly there have been some positive manufacturing and trade balance figures but it seems clear that a high interest rate environment is dragging on the UK economy. Markets remain in favor of a 25-basis point rate hike this month.US inflation figures released yesterday were mixed. Headline inflation rose 0.6% bringing the yearly rate to 3.7% which is slightly higher than markets expected. Markets still feel that the Federal Reserve will leave interest rates unchanged when they meet next week.
In Europe, the ECB has raised its inflation outlook to 3% in 2024 stoking fears of additional interest rate hikes by the ECB. Europe’s economy is slowing and that combined with higher inflation readings is creating a headache for the ECB who meet today to decide on interest rate policy. The market is split down the middle regarding whether they will hike rates or leave them unchanged.
Expected Ranges
- GBP/USD: 1.2400 - 1.2525 ▼
- GBP/EUR: 1.1580 - 1.1680 ▲
- GBP/AUD: 1.9350 - 1.9450 ▼
- EUR/USD: 1.0680 - 1.0780 ▼