ECB’s President Lagarde’s Speech Today Will Provide More Direction.

Following the ECB interest rate decision yesterday, the GBP/EUR faced volatility due to the hike. The GBP/USD also faced a drop due to positive retail sales and PPI data.

GBP (British Pound): The UK Consumer Inflation Expectations was released today from the Bank of England, with an increased figure to 3.6%, providing more pressure to the pound.

EUR/GBP moved back below the 0.8600 level after the ECB dovish hike. The rate could face mild downward pressure leading up to the Bank of England (BoE) meeting, but it appears increasingly uncertain to establish a clear direction in the short term.

Markets are closely monitoring the British Pound as they anticipate the publication of the Bank of England’s Monetary Policy Committee (MPC) rates, Consumer Price Index (CPI), and Producer Price Index (PPI). Economic data slated for release next week is expected to offer greater clarity and guidance for the direction of the GBP.

EUR (Euro): The European Central Bank’s (ECB) president Lagarde is speaking today  causing the EUR to bounce off its six month lows. After experiencing multi-month lows on Thursday, the Euro (EUR) found some upward momentum against the United States Dollar (USD) today, encouraging the EUR/USD to regain some strength in the 1.0660 region.

Following from yesterdays European Central Bank (ECB) release, they delivered a 25bps (basis points) interest rate hike. President Lagarde mentioned this may be the peak for interest rates in order to bring down inflation.

USD (United States Dollar): The United States Dollar (USD) continued to command attention following the publication of the US Consumer Price Index (CPI) data. With the US Michigan Consumer Sentiment Index being released today, we expect a slight decrease form last months reading which will apply some pressure to the USD.

Key Data Releases:

1. UK Consumer Inflation Expectations: The release of the UK Consumer Inflation Expectations today, which rose to 3.6%, influenced the GBP’s performance, adding pressure to the currency.
2. European Central Bank (ECB) Interest Rate Hike: Yesterday, the ECB implemented a 25 basis points (bps) interest rate hike, signaling potential changes in monetary policy and impacting the EUR.
3. US Michigan Consumer Sentiment Index: The release of the US Michigan Consumer Sentiment Index today was closely watched, with expectations of a slight decrease compared to the previous month’s reading. This sentiment data had the potential to affect the USD.

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