Currency news

GBPEUR hits 2023/2024 highs

Head of FX Analysis at Equals Money
-
3
min read
Publish date
28/05/24
    • EUR weakens on dovish Villeroy
    • USD in focus with core PCE on Friday


    Currency recap

    Last week seems so far away, so here is a quick recap. The combination of inflation not falling as much as expected, and a general election being called for the 4th of July all but dismissed the expectation of a June interest rate cut by the BoE, with markets pricing in November now for a rate cut. GBP garnered support as a result but gains were limited on the back of lower-than-estimated activity in May in the services and manufacturing sector and a decline in retail sales.

    EUR demand picked up as PMI numbers came in stronger and wage growth in Q1 came in higher easing expectations of a second rate in July by the ECB. USD attempted to claw back the month's losses following better PMI numbers causing either November/December to be pencilled in for the first rate cut.

    Today's GBP rates

    Currency pair Daily move* Indicative rate**
    GBPAUD -0.06% 1.9215
    GBPCAD 0.12% 1.7412
    GBPCHF 0.30% 1.1647
    GBPDKK -0.01% 8.7622
    GBPEUR -0.01% 1.1744
    GBPJPY 0.30% 199.9290
    GBPNOK -0.73% 13.4650
    GBPNZD -0.02% 2.0820
    GBPSEK -0.46% 13.5721
    GBPUSD 0.30% 1.2738


    *Daily move - against G10 rates at 7:30am, 28.05.24

    ** Indicative rates - interbank rates at 7:30am, 28.05.24

    Key data points

    Currency Event Period Consensus Previous
    EUR ECB 1 Year CPI Expectations Apr 2.90% 3.00%
    EUR ECB 3 Year CPI Expectations Apr 2.50% 2.50%

    Upcoming speeches

    • EUR: ECB Knot, Centeno
    • USD: Fed Kashkari

    What we think

    The spotlight this week falls on Friday's CPI numbers from Europe and core PCE inflation numbers from the US. Europe's core CPI number is expected to remain at 2.7% which will likely add to the case that the ECB may not need to make consecutive rate cuts this year. USD has had a poor May weakening across the board with markets going from one extreme to another, speculating on a rate hike this year to pricing in a rate cut in September. As we know the core PCE number is the inflation reading that the Fed focus on, so this reading will likely have a strong bearing on Fed commentary as well as determine which direction USD is likely to go.

    GBPEUR hit the 2023/2024 highs after ECB Villeroy commented that the ECB shouldn’t exclude a second rate cut in July. His comments come ahead of the ECB survey of CPI expectations for April. GBPUSD climbed to a fresh 2-month high as well.

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    About the author
    Thanim Islam
    Profile
    Head of FX Analysis at Equals Money

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