Sterling ticks higher

Daily Currency Update

Macroeconomic data was quiet on Monday with no key releases to note. UK public sector net borrowing has been released this morning and showed December 2023 was £7.8 bio which was £8.4 bio less than December 2022 and the lowest reading since 2019. The figures are largely down to the recent interest rate changes and, more specifically, the interest payable. GBP/USD started the European session under 1.2700 but has traded above 1.2700 since touching 1.2745 in the past hours. GBP/EUR has also ticked higher from 1.1650 to 1.1685.

Tomorrow, we await manufacturing and services data from both the UK and Europe, with UK service's recent move into expansion being one to watch for the GBP. This is ahead of Thursday’s interest rate decision and following a press conference from the ECB. No change is expected from the current 4.5% but market participants will look for clues as to when the ECB will likely cut its interest rates. Traders are currently pricing a 100 basis points cut in rates this year, with a 95% chance that the first will be in June. On the same day, we anticipate the GDP latest from the US as well as unemployment claims. A volatile day will be expected on Thursday.