Home Daily Commentaries Markets anxiously await several key interest rate decisions this week

Markets anxiously await several key interest rate decisions this week

Daily Currency Update

In Europe the ECB could be seen as the first Central Bank to start cutting rates from June.  Expectations are for the Euro to move lower in the coming weeks as markets increase expectations for additional interest rate cuts through the rest of 2024. 

The British Pound remains at a seven-month high vs the Dollar and Euro. The Bank of England meets this week to set interest rate policy as the market expects no change to support further growth in the UK economy. 

US inflation remains stickily high creating significant concerns for the Federal Reserve as it meets to decide interest rate policy this week. Market expectations reflect continued Dollar strength as stable and higher rates prevail.

Key Movers

The Euro will likely trade softer this week as market expectations for an ECB rate cut in June ramp higher. As inflation in the Euro bloc softens and growth sputters it leaves the ECB in a precarious position when setting interest rate policy. 

In the UK the Pound awaits inflation data and the Bank of England's interest rate decision this week. The currency should trade sideways before any announcement. Investors expect no change in rates as UK inflation remains stubbornly high and above the MPC's 2% target rate. 

We see upside risk for the US Dollar this week as the Federal Reserve hints at less interest rate easing through 2024. Economic data remains strong in the US but inflation is simply not falling enough to warrant the level of interest rate cuts as was expected by the markets.

Expected Ranges

  • GBP/USD: 1.2700 - 1.2800 ▲
  • GBP/EUR: 1.1650 - 1.1750 ▼
  • GBP/AUD: 1.9350 - 1.9450 ▼
  • EUR/USD: 1.0850 - 1.0950 ▲

Written by

Conor Fleming

OFXpert

With 30 years of experience in the foreign exchange world, Conor first embarked on his financial career journey as a trainee dealer in BNP Paribas in the early 90s. His professional journey also took him to New York, where he assumed the role of Head of Sales with an Irish bank for a few years. During his tenure at both banks, he was invited to several interviews on Irish television to discuss market turbulence, the factors driving volatility and insights into what could be expected as events unfolded.