Friday 10th May – The pound (GBP) started the day on a positive note after data revealed that the British economy exited recession in the first quarter of the year, with UK GDP expanding more than anticipated. However, Sterling failed to maintain its momentum. Concerns about slow growth in the coming months and expectations of imminent interest rate cuts from the Bank of England (BoE) weighed on the pound’s appeal, leading to a reversal of its earlier gains.
In contrast, the euro (EUR) faced downward pressure against many of its counterparts on Friday following the release of minutes from the European Central Bank’s (ECB) recent meeting. The minutes indicated that policymakers are planning to reduce rates at the ECB’s upcoming meeting next month, unless there are any unexpected inflation developments in the interim.
Meanwhile, the US dollar (USD) managed to make modest gains towards the end of the week, supported by an increase in US Treasury bond yields. However, the USD’s upward momentum was limited by a decline in American consumer confidence and a subdued market sentiment.
Thursday 9th May
The pound (GBP) experienced fluctuations, edging lower against its major counterparts following the Bank of England’s (BoE) announcement of its latest interest rate decision. Although the BoE kept its policy unchanged, Governor Andrew Bailey hinted at the possibility of faster rate cuts than what the markets had anticipated, adding pressure on the pound.
The euro (EUR) had a mixed performance on Thursday. Initially, the single currency stumbled as speculations of ECB rate cuts weighed on it. However, the euro managed to recover against its weaker rivals later in the day, benefiting from its negative correlation with the declining US dollar (USD).
Meanwhile, the US dollar weakened on Thursday after new US jobless claims surged more than expected, reaching the highest level in eight months. This raised concerns about a slowdown in the US labour market, leading to increased expectations of multiple rate cuts from the Federal Reserve in 2024 and putting pressure on the greenback.
Wednesday 8th May
The pound (GBP) faced losses against several major currencies, hitting a two-week low against the euro (EUR), as market sentiment turned pessimistic, weighing on the increasingly risk-sensitive currency. Additionally, investors remained hesitant to support the pound ahead of the Bank of England’s (BoE) forthcoming interest rate decision.
On the other hand, the euro found support during Wednesday’s session, despite a contraction in German industrial production. Although output in the Eurozone’s largest economy declined by 0.4% in March, it was better than the anticipated 0.6% drop. Furthermore, the euro benefited from a risk-averse market sentiment, strengthening as a safe-haven currency.
Meanwhile, the US dollar (USD) edged higher on Wednesday, buoyed by a risk-off market sentiment that prompted safe-haven flows into the ‘greenback’. Additionally, an increase in US Treasury yields provided modest support for the American currency.
Tuesday 7th May
The pound (GBP) lacked a clear direction on Tuesday, facing volatility due to a lack of UK data. Moreover, uncertainty prevailed as investors awaited the Bank of England’s (BoE) interest rate decision scheduled for tomorrow.
On the other hand, the euro (EUR) strengthened yesterday, disregarding a decline in German factory orders, and gained ground against its weaker counterparts. EUR was supported by an increase in German exports and a larger-than-expected recovery in Eurozone retail sales.
Meanwhile, the US dollar (USD) experienced mixed movement on Tuesday, remaining within a narrow range due to an uncertain market sentiment and a lack of significant data. Confusing statements from some Federal Reserve policymakers added to the uncertainty surrounding the ‘greenback’.
Friday 3rd May
The pound (GBP) faced challenges against its stronger counterparts on Friday, despite the UK’s final services PMI confirming robust expansion in April. Pressure on Sterling may have stemmed from Bank of England (BoE) rate cut speculations. Although markets anticipate a rate cut in August, there were speculations on Friday that the bank might initiate policy loosening as early as June.In addition, the euro (EUR) strengthened on Friday, benefiting from its strong negative correlation with a declining US dollar (USD). Additionally, new data revealed that the Eurozone’s unemployment rate remained at a record low in March, further supporting the EUR.
The US dollar slipped to multi-week lows on Friday following the release of the latest non-farm payrolls report, which indicated a sharper-than-expected slowdown in US job creation last month. Although USD exchange rates recovered as investors bought the dip, the ‘greenback’ still ended the day’s session lower overall, despite a weaker ISM services PMI.
Thursday 2nd May
Yesterday, the pound (GBP) declined following the OECD’s decision to slash its growth projections for the UK. The Paris-based think tank now anticipates the UK to have the weakest performance among G7 economies next year. Additionally, it revised down its growth forecasts for this year from 0.7% to 0.4%.
On Thursday, the euro (EUR) weakened as the Eurozone’s final manufacturing PMI confirmed a deepening contraction in factory activity across the Eurozone. However, the euro found some support in the afternoon due to its strong negative correlation with the US dollar (USD), which softened during the session.
The US dollar initially gained ground yesterday, supported by a risk-off sentiment and positive jobs data. However, it later retreated as risk appetite returned, diminishing the appeal of the safe-haven currency.
Wednesday 1st May
The pound (GBP) traded with little momentum yesterday following the release of the final UK manufacturing PMI for April, which confirmed a contraction in factory activity. However, the survey results were revised slightly higher than preliminary estimates, mitigating some of GBP’s losses.
Despite Eurozone markets being closed for the May Day holiday, the euro (EUR) found some support on Wednesday. A deteriorating market sentiment favored the safer single currency, while the euro’s negative correlation with a weaker US dollar (USD) also contributed to its resilience.
The US dollar encountered difficulties on Wednesday following a surprise contraction in the American manufacturing sector and a more pronounced slowdown in job openings. USD exchange rates then declined further after the Federal Reserve’s decision in the evening. Fed Chair Jerome Powell’s unexpectedly dovish tone weighed on the ‘greenback’.
Tuesday 30th April
The pound (GBP) struggled to find direction on Tuesday as the absence of UK economic data left it susceptible to shifts in market sentiment. In this environment, the currency, increasingly sensitive to risk, weakened against safer counterparts but managed to gain against riskier currencies.
The euro (EUR) strengthened during the session following positive Eurozone GDP data, which surpassed expectations, signaling a promising return to growth in the first quarter of 2024. Additionally, the Eurozone consumer price index exceeded forecasts, with headline inflation holding steady at 2.4% and core inflation easing from 2.9% to 2.7%—above the predicted 2.6%. These figures prompted speculation of a less aggressive pace of policy loosening from the European Central Bank (ECB).
Meanwhile, the US dollar (USD) advanced as diminishing risk appetite bolstered demand for the safe-haven currency. Recent optimism surrounding peace talks in the Middle East waned after Israeli Prime Minister Benjamin Netanyahu announced plans to continue with his controversial assault on Rafah, stating that he would proceed “with or without a [ceasefire] deal.”
Monday 29th April
The pound (GBP) advanced against several counterparts on Monday, despite the absence of significant British economic data. The currency, increasingly influenced by market sentiment, benefited from a positive mood in the market, buoyed by hopes for progress on a ceasefire deal in the Middle East.
Conversely, the euro (EUR) faced challenges on Monday as economic sentiment in the Eurozone unexpectedly declined in April. Additionally, mixed German inflation data added to the currency’s volatility. Although the harmonized inflation rate surpassed forecasts, headline inflation fell short of expectations.
Meanwhile, the US dollar (USD) started the week on shaky ground as the prevailing risk-on sentiment reduced demand for the safe-haven currency. Optimism surrounding ceasefire negotiations in the Middle East, coupled with last week’s impressive profit announcements from numerous tech and commodities firms, boosted investor confidence.
Currency Ranges for the month:
GBP/USD: Low: High:
GBP/EUR: Low: High:
EUR/USD: Low: High: