• Pill and PMI’s provide short term boost for GBP
• USD loses ground ahead of GDP and core PCE
Yesterday, GBP was looking oversold, and GBP buyers swooped in to support the currency. Better than expected PMI numbers, as well as BoE Chief Economist Huw Pill being perceived as hawkish, caused a nice bounce seeing GBP rise across the board. UK PMI numbers were in fact higher than both the US and Europe's, aiding the UK recovery story, and BoE Pill suggested that he is still cautious about inflation. Markets scaled back June rate cut expectations from 65% to 48%. USD weakened across the board, with their PMI numbers coming in lower-than-expected.
CPI numbers in Australia came in higher than expected, adding to markets pricing in a small possibility of a rate hike by the Reserve Bank of Australia in August. AUD is stronger across the board.
Following yesterday’s support for GBP, it would seem in the short term we will see less selling pressure on GBP given the economic calendar and BoE speak will be quiet. But given there is a clear division within the BoE now, analysts still feel that over the medium term we could see further downward pressure, so for clients looking to sell GBP it's worth taking note of the retracement to look at hedging for future needs. The USD sell off yesterday was dictated by a divergence in the PMI numbers from the US and Europe, and this could continue today ahead of the 1st quarter GDP and core PCE numbers later this week.
Today's Interbank Rates at 09:20 am against GBP movement.
GBP>EUR – 1.1628
GBP>USD – 1.2429
EUR>USD – 1.0688
GBP>CAD – 1.7001
GBP>AUD – 1.9105
GBP>SEK – 13.494
GBP>AED – 4.5642
GBP>HKD – 9.7340
GBP>ZAR – 23.760
GBP>CHF – 1.1358
GBP>PLN – 5.0188
• EUR: ECB De Cos, Nagel, Villeroy
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