Home Daily Commentaries Lack of macroeconomic data leaves major currencies trading within ranges

Lack of macroeconomic data leaves major currencies trading within ranges

Daily Currency Update

This week will be unusually quiet, with little macroeconomic or policy news likely to move markets in any of the major economic areas.  A handful of speeches by central bank officials will provide some focus for the market. The most important of these will be ECB President Lagarde and FOMC voting member Mester. Bank President Christine Lagarde reiterated that price pressure remains strong in the Euro area and the policymaker also stated that no clear evidence that underlying inflation has peaked. 

Key Movers

The CPI inflation surprise from two weeks ago continues to support the pound, as Bank of England rate expectations are heightened. Markets have priced in 100bps of additional UK rate hikes in 2023, with investors not expecting a rate cut until May next year. The persistent inflation and prospect of more rate hikes poses continued frustration for Prime Minister Rishi Sunak’s Conservative government, which is widely expected to fight another election in 2024.   

 The pound gained traction against the euro this week as it reaches high’s not seen since last December and with rates at 3.25% below core, the European Central Bank still has plenty of work to do. Inflation levels in the Eurozone remain high at 6.1% year on year. Another 339k jobs were added to the US nonfarm sector last month, this report reduces the pressure on the Fed to hike again at the June meeting, though a bad inflation number next week could change expectations again. 

 The US economy averted a crisis over the weekend when President Joe Biden signed legislation to extend the nation’s borrowing capacity for two years. The USD may be less volatile this week with a relatively thin amount of economic news ahead of another key meeting of the Federal Reserve in eight days.

Expected Ranges

  • GBP/USD: 1.2250 - 12500 ▲
  • GBP/EUR: 1.1350 - 1.1700 ▲
  • EUR/USD: 1.0550 - 1.0780 ▲