Key Headlines

•            Yesterday's higher CPI number a blip?

•            USD weakens on talk of currency intervention

Recap

Despite UK CPI numbers yesterday morning coming in higher than expected, and markets pushing back rate cut expectations to September, GBP gains did not follow which is what you would normally expect. Governor Bailey added to GBP woes with some dovish comments, suggesting that the job market is loosening as well as expecting a large drop in inflation next month. He also attempted to differentiate the UK from the US by stating that the UK faces less inflation risk than the US. USD weakened for the first time in six days also as treasury yields declined, and amidst talk of currency intervention in Japan and Korea. The EUR drew support, as ECB president stated that the Bank is watching FX moves very closely.

Today’s Overview

Listening to Governor Bailey's dovish comments yesterday, it seems yesterday’s CPI number could be a blip in the down-trending inflation numbers for the UK. Whilst market pricing for rate cuts is in line with the Fed for now, there is room for further GBP weakness should markets start pricing in an earlier rate cut by the BoE.  

With central bankers talking FX (Japan, Korea, EU), there is room for some consolidation for USD, and thus purely on markets repositioning we could see some USD weakness in the short term. But worth noting that the fundamental picture remains unchanged and, in a market where the Fed seems to be the most reluctant to cut rates anytime soon, USD seem likely to benefit in the longer term.

Today’s focus will fall on a host of central bank speakers from the ECB, BoE and Fed.

Equals Market Analysis– 18^th April 2024

Today’s Rates

Today's Interbank Rates at 09:27 am against GBP movement.

GBP>EUR – 1.1679

GBP>USD – 1.2471

EUR>USD – 1.0676

GBP>CAD – 1.7154

GBP>AUD – 1.9339

GBP>SEK – 13.580

GBP>AED – 4.5786

GBP>HKD – 9.7640

GBP>ZAR – 23.734

GBP>CHF – 1.1330

GBP>PLN – 5.0635

Speeches

•          EUR: ECB Guindos, Nagel, Centeno, Simkus, Vujcic

•          USD: Fed Bowman, Williams, Bostic

•          GBP: BoE Greene

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