Trading was very indecisive yesterday given the lack of any major catalysts in the market. GBPUSD attempted to breach the recent 4-week highs, but there seemed a reluctance for any USD weakness ahead of barrage of Fed speak this week and Thursday's core PCE inflation number. EUR was broadly stronger as well.
Inflation in UK shops fell to the lowest since March 2022 according to the British Retail Consortium, with prices rising 2.5% in February compared to 2.9% a year ago.
*Daily move - against G10 rates at 7:30am, 27.02.24
** Indicative rates - interbank rates at 7:30am, 27.02.24
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Little out today on the data front but we have Fed member Barr and BoE member Ramsden speaking today. Comments may not have much of an effect, given markets are waiting for US and EU inflation towards the end of the week. USD has started the day weaker with both GBPUSD and EURUSD looking to break recent highs.
BNP Paribas joined in the bullish calls for GBPEUR this year following on from Bank of America, Credit Agricole, and MUFG, all of whom have raised their end of year targets. One of the main drivers for further gains for GBP will be if the ECB elect to cut interest rates before the BoE this year, as well as continued widening divergence on the relative economic performance of the UK and Europe. Time will tell, but if you feel the same and have EUR requirements then please contact our dealing desk on +44 (0)20 7778 7500 to place any limit orders for GBPEUR. For EUR sellers, now could well be the time to look at hedging your future requirements to counter the potential for negative moves on GBPEUR.
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