Key Headlines

•            USD benefits on Europe/US rate policy divergence

•            Decision day for GBP markets

Recap

There was a sense of nervousness on GBP pairs following yesterday's rate cut by the Riksbank in Sweden. The move once again highlights the divergence in rate policies between central banks in Europe and the US and brings into question the possibility that we could see a dovish BoE meeting today, and thus the markets putting in higher odds of a rate cut in June.

Meanwhile stateside Fed member Susan Collins kept on her hawkish hat, suggesting that reaching the 2% inflation goal may take longer and thus rates will need to stay higher for longer.

Today’s Overview

So, all eyes on Threadneedle Street at noon today, and whether we get a dovish BoE or not. Recent comments from Governor Bailey and deputy governor Ramsden were perceived as dovish, with suggestions that inflation will quickly fall this month. However, the chief economist Pill seemed more hawkish, suggesting his thoughts on inflation hadn't changed since March. A dovish BoE will likely increase the odds of a June rate, currently at 50%, and causes declines for GBP. But given the nervousness seen over the last few days, anything perceived less than dovish, and we could see a spike in demand for GBP and a retrace back to recent highs.

Should the BoE be on the dovish side then we will likely see USD gain across the board, with the divergence on rate policy between Europe and the US highlighted again.

Equals Market Analysis– 9th May 2024

Today’s Rates

Today's Interbank Rates at 09:34 am against GBP movement.

GBP>EUR – 1.1626

GBP>USD – 1.2472

EUR>USD – 1.0727

GBP>CAD – 1.7126

GBP>AUD – 1.8973

GBP>SEK – 13.634

GBP>AED – 4.5799

GBP>HKD – 9.7500

GBP>ZAR – 23.123

GBP>CHF – 1.1341

GBP>PLN – 4.9980

Speeches

•  GBP: BoE Bailey

• EUR: ECB Cipollone, Guindos

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