Pound enjoys end of week rally

Philip McHugh May 20th 2024 - 2 minute read

The pound trended higher on Friday, amid an apparent easing of Bank of England (BoE) interest rate cut speculation.

Sterling opens this week in a narrow range, with GBP/EUR subdued at €1.1673, and GBP/USD muted at $1.2704. GBP/CAD is flat at CA$1.7290, while GBP/AUD and GBP/NZD hold steady at AU$1.8970 and NZ$2.0733, respectively.

Coming up, will comments from BoE Deputy Governor, Ben Broadbent aid the pound this morning?

What’s been happening?

The pound closed last week’s session on a positive note, with the uptick in the currency appearing to be linked to a modest repricing of Bank of England interest rate cut bets.

GBP/USD climbed just shy of a two-month high, GBP/EUR struck its best levels since the start of May.

The euro, meanwhile, traded sideways on Friday, following mixed comments from European Central Bank (ECB) officials.

While Vice President Luis de Guindos suggested inflation is on target to return to the bank’s target range by 2025, his colleague Isabel Schnabel pushed back on bets for further cuts after June.

At the same time, the US dollar struggled to find direction at the end of the last week, as ongoing Federal Reserve rate cut speculation offset an uptick in US Treasury yields.

What’s coming up?

Turning to this week, the focus at the start of the session is likely to be a speech by BoE Deputy Governor Ben Broadbent.

If Broadbent strikes a more hawkish tone than that struck by some of his colleagues in recent weeks, then the pound may rally. On the other hand, a dovish outlook from Broadbent could sap Sterling sentiment.

Meanwhile, USD investors will look to speeches by Federal Reserve policymakers Raphael Bostic and Michael Barr for fresh impetus this afternoon. Expect to see the US dollar stumble if the officials strike a broadly dovish tone.

Finally, in the absence of any notable Eurozone data, movement in the euro may be limited at the start of this week.

Written by
Philip McHugh

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