GBP declined into the weekly close after BoE’s Ramsden signaled that he’s less concerned about UK inflation than previous months, adding onto Governor Bailey's dovish comments on Wednesday. Market pricing for a UK rate cut has now moved from September to August. The USD gains from earlier in the morning faded across the day, as the tensions and concerns following Israel's strikes on Iran eased over the course of the day.
*Daily move - against G10 rates at 7:30am, 22.04.24
** Indicative rates - interbank rates at 7:30am, 22.04.24
The highlights in this week's economic calendar will be first quarter numbers for US GDP, as well as core PCE numbers. Friday will also see the release of March’s core PCE number. An uptick in these numbers will support the recent Fed comments, and should support further gains in USD. On Tuesday we have PMI numbers for the month of April from the EU, UK, and US.
Market sentiment is a bit more upbeat this morning as markets price out some of the geopolitical risk of late. However, GBP has mostly opened up lower across the board as markets continue to digest and rethink the BoE’s projected rate policy.
GBP finished lower for the third consecutive week as markets continue to reprice when the Bank of England will cut interest rates. August seems to be the month in the markets' mind for the time being, but repricing for an earlier cut would not bode well for GBP. This week's focus for GBP will fall on the PMI numbers for April, and we will need to see a pick up in activity in order to alter the negative sentiment on the currency.
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