Greenshoots from escaping UK recession?

Market reports
Thanim Islam
  • Fed minutes suggest caution in cutting rates too early
  • Nvidia upbeat outlook adds to risk appetite
  • PMI numbers in focus today
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Yesterday's European session was very tentative, with a marginally weaker USD and stronger EUR going into the evening's Fed minutes.

The minutes revealed some caution amongst policy makers of cutting interest rates too soon. Fed Bowman also weighed in separately after stating that the time to cut rates is certainly not now. So nothing new for the hawkish camp and USD was unmoved from this.

However, equities reversed losses from earlier in the day after Nvidia’s sales guidance beat market consensus. The higher risk mood has weighed on USD, with GBPUSD and EURUSD climbing higher.


Market rates

*Daily move - against G10 rates at 7:30am, 22.02.24

** Indicative rates - interbank rates at 7:30am, 22.02.24

Table (77)

Data points

Table (78)


  • None.

Our thoughts

Finally some data to sink our teeth into, and hopefully some volatility to come today with the release of PMI numbers. Current expectations see the UK leading the pack with PMI activity remaining at 52.9, US activity slowing marginally to 51.8, and activity in Europe expected to stay in contraction. Continued divergence in economic activity should support the notion that growth both in the UK and the US will outstrip that of the eurozone, and should support GBP and USD over the EUR in the medium term.

The risk-on mood is continuing to be felt this morning following the Nvidia results, with both GBPUSD and EURUSD seemingly looking to revert towards their 50-day moving averages ahead of the PMI number today.

Chart of the day

Last week we learnt that the UK officially fell into a recession in the second half of last year, but if recent PMI data is anything to go by, then there are possible greenshoots of a recovery in the UK economy for the start of this year, which in theory should support GBP, particularly vs the EUR. Obviously we still need to consider what implications this could have on the BoE’s interest rate policy, but nonetheless perhaps its not all doom and gloom for the UK?

22022024 cotd
Source: Bloomberg Finance L.P.

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