Last week was quite eventful for Stering exchange rates with a higher than expected inflation print causing GBPEUR to spike to 1.1770 and GBPUSD to 1.2770- the data overall was seen as positive as it was low enough for the Government to take a victory lap, but now low enough to jolt the BoE into doing a rate cut- due to this, the UK PM announced a general election for July 2024- just over a month away as he felt the work his Government has been doing is now bearing fruit.
Market effects of an election are unclear at this point, usually we see some volatility close to the result but essentially the way I view it is that a strong majority for the winning party = Sterling strength and a lack of majority would mean Sterling weakness. This has been evident in previous elections- Boris Johnson’s landslide win in 2019 caused GBPEUR to rise to 1.21 following the result.
The last week of May will be relatively quiet- but we have a few important releases from Europe and the U.S- On Wednesday we have EU Consumer confidence alongside economic and industrial sentiment- the releases are expected weak but a slight improvement to the previous month. Later on Wednesday we have U.S GDP growth rate numbers where we are expecting a release of 1.4%, this will release alongside joblss claims and trade balance.
On Thursday we have EU Inflation data where the expectation is a release at 2.7%, if we see a lower than expected figure this will cement an ECB cut in June and potentially weaken the Euro further, later in the day we have U.S Core PCE price index data where we are expecting a stable release at 2.7%, anything higher or lower will move the Dollar as it would influence the Fed’s next move.
GBP/EUR 1.1732 GBP/USD 1.2760 GBP/AED 4.6797
GBP/AUD 1.9152 GBP/CHF 1.1630 GBP/CAD 1.7392
GBP/NZD 2.0698 EUR/USD 1.0864 GBP/ZAR 23.344