17/04/2024 – Exchange Rates
- April 17, 2024
This morning has seen some much needed relief provided for GBP against it’s major currency peers, USD & EUR in particular with GBP climbing around 0.5% against both currencies after March’s Inflation figures were released. Inflation was expected to drop down to 3.1%, however it’s proved fairly dogged this morning and dropped slower than expected with figures coming out at 3.2%. It is still however the lowest inflation reading in The UK since late 2021 with food prices contributing the most to this reading, with prices for Meat, Chocolate, Biscuits & Crumpets helping bring inflation down.
One of the main reasons we’ve seen inflation struggle to hit the expected 3.1% figure was due to rising fuel prices in March off-setting the decrease in food prices. The Bank of England’s next policy meeting is on Thursday 9th May and with Sterling strengthening this morning I would put that down to markets pretty much ruling out an interest rate cut in May. Although inflation is continually dropping, the fact that its proved pretty sticky in March (similar to The US) it almost allows the Bank of England another month at monitoring economic influences before making any decisions on cuts, and therefore keeping Sterling buoyed.
Keeping with inflation, we have The EU’s inflation release for March. Current forecasts suggest inflation will drop below the 3% mark, hitting 2.9% which would not only provide some relief for consumers but also start to apply some real pressure to The European Central Bank on cutting interest rates sooner rather than later. If this was to play out as expected, we could see some Euro weakness as the morning progresses. Although, as markets have shown this morning that isn’t guaranteed.
The rest of the week is fairly quiet on the economic front, with really just Retail Sales in The UK being released on Friday. The main focus for the next 48 – 72 hours will be any further comments from Bank of England or European Central Bank officials regarding plans for interest rate cuts at some point in the next few months.
GBP/EUR 1.1692 GBP/USD 1.2446 GBP/AED 4.5644
GBP/AUD 1.9380 GBP/CHF 1.1342 GBP/CAD 1.7188
GBP/NZD 2.0982 EUR/USD 1.0628 GBP/ZAR 23.599