Pound rallies as markets await Eurozone CPI
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Daily Currency Update
The pound has had a solid start to the week with it rallying versus both the US dollar and the euro, recouping the losses seen earlier in the month. GBP/USD has managed to get a foothold above 1.25 and GBP/EUR has managed to regain the 1.17 level. The latter’s move was helped by some under-par inflationary data seen from Germany yesterday which saw CPI hold at 2.2% y/y when a slight uptick to 2.3% was expected. Although the pound is vulnerable to bad data at present the expected divergence between the European Central Bank, which is expected to start cutting rates from June, and the Bank of England, which may not cut until August, is keeping sterling propped up versus the euro. Also, there is an expectation that the ECB may cut more times than the BoE in 2024, however a lot will depend on the UK’s next CPI print. GBP/USD is currently at around 1.2535 with GBP/EUR at 1.1710.Key Movers
Today’s main event is the latest Eurozone inflation reading scheduled for later this morning. The overall level of CPI is predicted to hold steady at 2.4% y/y with the core reading, which strips out volatile food and fuel costs, predicted to fall back to 2.6% from 2.9% y/y. As usual any major over/undershoot will likely move the shared currency. At the same time we have the first estimate of first quarter growth from the eurozone with 0.1% expansion expected. From the States this afternoon brings Employment Cost Index numbers at lunchtime which is a measure of wage growth. Later on the monthly Conference Board Consumer Confidence reading will be released. EUR/USD is currently just over 1.07.Expected Ranges
- GBP/USD: 1.2470 - 1.2600 ▲
- GBP/EUR: 1.1660 - 1.1745 ▲
- GBP/AUD: 1.9120 - 1.9300 ▲
- EUR/USD: 1.0640 - 1.0750 ▼