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Foreign Exchange Analysis ~ 04 June 2024


GB Pound

What happened last week?

↓ Cable dropped from a high of 1.28 on Monday to 1.268 on Wednesday. The pair recovered slightly in the second half of the week.

 

What to watch for in the short-term?

 With a quiet week ahead for UK data, Cable is unlikely to see much volatility before US employment data on Friday.

 

What about the coming months?

 As the political parties finalise their election manifestos the BoE has cancelled its speeches between now and the rate announcement on June 20th.



US Dollar

What happened last week?

 Although GDP and PCE data was perfectly in line with expectations, the release elicited a caused a slight softening of the Greenback in the latter half of the week.


What to watch for in the short-term?

 While the Central bank focus remains on inflation, as prices return to target the Fed will begin to pay more and more attention to the unemployment figures. In the meantime, wage inflation will be the key metric in this week’s Jobs report alongside Nonfarm Payrolls on Friday.


What about the coming months?

↑ One risk for EURUSD for H2 2024 is how many cuts we will see from the ECB. Markets will be keeping a keen eye on Thursday’s announcement for any hint to when we could see a second rate cut.


Calendar

Friday 1.30pm | Nonfarm Payrolls (May)


Euro

What happened last week?

↓ GBPEUR hit the highest level since August 2022 at the start of last week before a Euro recovery on the back of higher-than-expected inflation figures (Core HICP up to 2.9% from 2.7%)

 

What to watch for in the short-term?

 The event risk for GBPEUR this week lies with the interest rate announcement on Thursday. With some predicting a hawkish accompanying statement from the ECB, we could see GBPEUR depreciate further toward 1.17.

 

What about the coming months?

 The results from the European parliamentary elections this week will affect EU policy and its trade agreements over the coming years.

 

Calendar

Wednesday 10am | PPI (Apr)

Thursday 1.15pm | Interest Rate Announcement

Friday 10am | GDP YoY Q1







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