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  • richard evans

GBP in favour but gold shines brighter

Good morning

 

Welcome back.  I hope you enjoyed the weather over the weekend.  Delightful and most welcome, lets hope it stays that way.

 

We’ve been pretty quiet in FX recently, although a bout of GBP buying late Friday afternoon took GBPUSD up to 1.2700 and it has sat around there ever since.  Now 1.2705, it means that with EURUSD still around 1.0875, GBPEUR is clawing its way back towards 1.1700.  It got to 1.1690 on Friday, now 1.1680, a healthy recovery having been down around 1.1600 last week.  USDJPY is holding around 155.65 despite ongoing talk of a possible BoJ rate rise, which puts GBPJPY up at 197.65.  It has actually been above 198.00 overnight.

 

Quite why GBP has enjoyed this little flurry is not fully explained.  Indeed, with some banks lowering their forecast for ECB rate cuts to three cuts this year, down from four, it would be more reasonable to think we should see a slightly stronger EUR than GBP.  Not so.  However for much of 2024 GBPEUR has been sitting within 20 pips or so of 1.1700, a level it currently seems comfortable with.

 

Gold has had another push higher, trading to around $2,450.  The ongoing demand from China and the weaker USD combining to send the precious metal to these record highs.  We’ve also seen new highs in copper on the LME, which in turn seems to have given AUD a bit of support.

 

The Iranian President Raisi, and the Iranian Foreign Minister have been killed in a helicopter crash.  When I first read the headline I wondered whether it was a deliberate attack, which wold have explained gold’s rally, however it would seem that bad weather conditions were to blame.  Even so, there is a concern that the accident will lead to greater instability in the region.  Raisi was a hardliner who is unlikely to be missed by many Iranians.  The anti-government protests that followed the death of a young lady who had been arrested for wearing her hijab incorrectly.  Whether we now see a more tolerant and open Iran remains to be seen.

 

Congratulations to Man City for yet another Premier League title.  One cannot fault them for their dominance although with 115 financial fair play charges still hanging over them i’m still surprised they haven’t been docked any points when the likes of Everton and Notts Forest have both been deducted points for, some would say, much smaller breaches.  Anyway, Spurs held on to that fifth place so they will be in Europe next season.  We’ve now got the FA cup final to enjoy next weekend, along with that Championship play-off final between Leeds Utd and Southampton to decide which team will earn promotion to the Premier League.

 

We will then have a short break from football until mid-June when the long-awaited Euro 2024 tournament arrives.  I’m looking forward to that, England are favourites but we all know how well England do at getting almost there and then failing at the last hurdle.  Will this year be any different?

 

In other sports, Fury lost to Usyk on Saturday night.  I didn’t see it but presume it was a decent battle.  Verstappen won the F1 grand prix, although Norris did run him close, his McLaren finishing less than one second behind the Red Bull. 

 

Not much on the calendar today other than few Fed officials speaking at various events.  Things should liven up a bit later in the week with UK inflation on Wednesday morning, UK, EU and US PMIs Thursday and UK retail sales Friday. 

 

Have a great day

 

 

-  10.00 BoEs Broadbent speaks

-  13.45 Feds Bostic speaks

-  14.00 Feds Barr, Waller speak

-  15.30 Feds Jefferson speaks

-  00.00 Feds Bostic speaks

-  01.30 AUS westpac consumer confidence

-  02.30 RBA minutes

 

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