Home Daily Commentaries EUR/USD close to 13 month high

EUR/USD close to 13 month high

Daily Currency Update

GBP/USD briefly traded above 1.25 overnight, the third time this month it has broken above the key psychological level however it has again failed to hold onto its gains and has slipped back under as we start today’s European session. Dollar weakness has been a theme for the past month as markets begin to forecast an end to The Federal Reserve’s interest rate hiking cycle so another move toward the 1.25 level could be on the cards before too long. The Office for Budget Responsibility today confirmed that the government borrowed less for the last fiscal year than had been predicted. The number was still an eye-watering £139.2bn however it was less than the £150bn that had been forecast. Recent economic data from the UK has outperformed however it is going to be hard to keep this momentum up as more and more people come off fixed-rate mortgages and are faced with much higher borrowing costs. That said it looks like we could see anaemic growth eked out for Q1 2023 when the official data is released on 11th May. Later today we have the Bank of England's Deputy Governor, Ben Broadbent speaking in London so any commentary about the Banks next interest rate decision also on 11th May will be closely monitored. A hike of 25bp is the consensus at present. GBP/USD currently trades around 1.2470 with GBP/EUR at 1.13.

Key Movers

EUR/USD hit 1.1067 overnight its highest level since April 14th (1.1076) which in turn was its highest level since March last year. The euro has surged recently on the back of the aforementioned dollar weakness and expectations that the European Central Bank will continue to hike rates for at least the next two or three meetings to combat stubbornly high inflation which currently sits at 6.9%. Markets are split as to whether it will go 25bp or 50bp on May 4th with a lot riding on May 2nd CPI number. It is a quiet day from the Eurozone however there is some data of note from the States this afternoon including the Conference Board Inc's monthly Consumer Confidence Survey which is expected to slip a touch to 104.1. We also have New Homes Sales and The Richmond Fed Manufacturing Index both of which are also predicted to slip a little from last month’s readings. EUR/USD is currently at 1.1030.

Expected Ranges

  • GBP/USD: 1.2410 - 1.2540 ▲
  • GBP/EUR: 1.1250 - 1.1375 ▼
  • GBP/AUD: 1.8635 - 1.8800 ▲
  • EUR/USD: 1.0975 - 1.1100 ▼