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Currency Market Update - 23rd April 2024

Currency Market Update The recent dovish sentiment from BoE on their stance on interest rates has seen GBP fall sharply, in particular to the USD. After both Bank of England members Bailey and Ramsden last week announced a different path for BoE on their monetary policy, suggesting that inflation levels have fallen steeper than anticipated.

Their outlook is that this will continue throughout April, suggesting that CPI (consumer price index) for May should naturally follow suit.

The difference from these market fluctuations is that its solely based on comments from BoE officials and not yet back by data – that will be released after their next policy meeting. Historically when see a change of tone from central banks officials rearranging market levels, the momentum tends to follow suit for up to a 10-day period. Continuing last Friday – expectations is that GBP will continue its weakness.

In the Asian markets we can see that USD/JPY is close reaching a 34-year high after hawkish signals from the Federal Reserve. Latest from BoJ (Bank of Japan) is that they will hold interest rate on hold, historically being very conservative on monetary policies. If we would see the exchange rate reach 155, its likely to trigger a government intervention to stabilise currency pair. This could create additional volatility and potentially drive some weakness towards the USD.




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