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Currency Market Update - 18th April 2024

Currency Market Update Sterling has this morning failed to capitalise on the stronger than expected inflation figures released yesterday for The UK, mainly due to comments made by Bank of England Governor Andrew Bailey.

Even though March’s inflation numbers were stronger than forecast, Andrew Bailey dismissed this as a possible trend. Stating this was in line with the bank’s expectations for inflation to dove-tail slightly before seeing another considerable drop. The markets this morning have taken these comments as intent from The Bank of England to still proceed with an interest rate cut in June, which would provide a scenario where interest rates in The UK potentially come down at a faster rate than of those in The U.S.

If this was to happen then we would again see some downside pressure on GBP against The Dollar, and this exact scenario has played out this morning with GBP falling nearly 0.3% against the Euro. So far Sterling seems unmoved against The Dollar but that’s more so due to softer dollar than the other way around.

Keeping with The UK, we have March’s Retail Sales figures set to be released and after February’s horrific weather causing sales to drop, it’s expected that sales picked back up again last month. According to The British Retail Consortium we should see a steady rise of an annual 3.5% growth. The main contributor towards this improvement was because of Easter being a week earlier than usual. The Easter weekend in general saw consumers up their spending on food items by roughly 7% compared to the same time last year. As well as this, it’s common in The UK for families to play hosts to friends and families over this weekend and therefore home shopping categories, such as textiles, tableware and cookware also witnessed an increase in spending. Expectations for the coming months in Sales seem to point towards a continued upward trend, especially with the warmer weather now seemingly around the corner as well as the summer Olympics in Paris.

If the Retail Sales back this up then we could see further strength for GBP against it’s peers, however any figure weaker than the 3.5% growth could potentially be damaging to The Pound’s prospects.



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