Published: 03/05/2024 By ECAP
GBP continued its strong week in early trading on Friday however reports are increasingly pointing to a correction with many feeling Sterling is in a precarious position. A report from HSBC has indicated that relative to the all-important bond market, the UK currency is currently overpriced. Add to this the impending BofE interest rate cutting cycle and we could see a twitchy few weeks for GBP, especially if the start date for the cycle is brought forward to June.ECB Chief Economist Philip Lane indicated in a lecture he was giving that whilst the ECB is not committed to a specific rate trajectory, it is going to continue to very much adopt a data-dependent approach. Early morning trading, however, has seen the risk-sensitive currencies like the Euro gain some ground as eyes turn towards the non-farm payrolls.
A quiet day yesterday for the Greenback with all eyes being on todays non-farm payrolls. Consensus is that disappointing non-farms will have more of an effect on USD than if they return strong numbers, as a delayed interest rate cut is effectively priced in for December. Strong economic performance from the States has most analysts expecting a strong print, which will see more long positions on the dollar propping it up further. Incidentally, this is the highest consensus forecast since September 2022.
Data supplied by GC Partners