As we can see below, trading was relatively subdued in the absence of any major news or data points over the course of European trading hours. Overnight with Asian equities finishing lower, demand for USD picked up, seeing both GBPUSD and EURUSD hit 1-week lows.
*Daily move - against G10 rates at 7:30am, 08.05.24
** Indicative rates - interbank rates at 7:30am, 08.05.24
Another quiet economic calendar today, with the only possible market mover being the Riksbank (Swedish central bank) monetary policy meeting this morning. The Bank are currently expected to cut interest rates from 4% to 3.75%, a move that would highlight the difference in rate expectations between Europe and the US.
As a result, a cut today could see further demand for USD. Client focus remains heavily on tomorrow’s BoE meeting and how the vote split will pan out. Current expectations see a 7-2 split, with members Dave Ramsden and Swati Dhingra favouring a cut. Downside risks to GBP will come in the form of either the Bank hinting at a rate cut to come in June, and/or we have more than two members favouring a rate cut.
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