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  • richard evans

GBP unable to hold post-PMI gains but pressure still on upside

Good morning


Better than expected UK PMI numbers yesterday sent GBP higher, GBPUSD hitting 1.2775 and GBPEUR up to 1.1715.  However those gains were relatively short-lived, GBPUSD now back to 1.2720 and GBPEUR back below 1.1700 at 1.1685.  Stronger US PMI numbers partly to blame for the GBPUSD decline.  GBPUSD has been stuck in a 1.2600-1.2800 range through 2024 and other than a brief blip in late December one could argue that same range has held since mid-December.  Right now it’s the upside that looks under most pressure.


BoC made their rate announcement yesterday, keeping rates on hold as widely expected and did err on the slightly dovish side, removing the guidance of potential rate rises as they see CPI down to 2.5% through 2024 and then to 2% through 2025, although did add that they could still raise rates if there were to be any surprises.  USDCAD ticked higher, helped as well by the stronger US data, the pair reached 1.3535 bringing the potential to lock in a small profit from the 1.3500 call I mentioned yesterday. 


Bloomberg reports of a fund that has amassed a large short bet against German companies including Deutsche Bank and VW.  This comes on the heels of a report that German regulators may take action against BMW for including a device in the engine control of some diesel engines that would manipulate emissions readings.  You may remember VW had the same issue back in 2015, I’m not sure what the total cost to VW was but it ran into billions. 


I reported political issues in Germany recently, with the right-wing AfD party gaining support in some areas but also looking to be banned by  others for their mass-deportation ideas.  Immigration is becoming a significant issue in the West, as many gaining entry have little notion of integration.  The recent Israel/Gaza conflict has brought a  lot of that feeling to the fore, highlighting the vast differences in ideology in ‘western values’ and some of those choosing to settle here.  If we were to see an economic downturn I’d expect these issues to escalate which could cause significant difficulties.  Is there a storm brewing?


We’ll hear from the ECB today with regards to their latest interest rate moves.  Expected unchanged, it will be Lagardes comments that come under close scrutiny, it is thought she will do her best to push back against early rate cuts but she’s still likely to mention we’ve seen a peak in rates and that a rate cut later in the year could well be appropriate.  I think this is pretty much priced in so we’d have to have a real dovish shock for us to see a significant impact on the single currency. 


We also have the Turkish central bank announcing rates today, they are expected to raise rates by 2.5% to 45% but this is unlikely to stop the trend of weaker TRY, USDTRY now just shy of 30.30, while EURTRY is almost 33.10.  Anyone looking for a cheap summer holiday could do worse than head that way although I’ve not actually been there other than a day trip from Kos once so please don’t take my comments as a glowing reference.  With inflation at 65%, would a meal out cost more by the end of a holiday than at the start?


We will also have rate announcements from Norway and South Africa, both expected unchanged.  Norges Bank are probably the more keen to lower rates but NOK may well still be a bit too weak for them to do so this time, while the risks in South Africa are possibly more on the hawkish side given sticky inflation.


Liverpool did make it into the EFL Cup final by beating Fulham on aggregate but it wasn’t the drubbing I’d feared it may be.  The Liverpool-Chelsea final will be on 25th Feb, reckon that could be a cracking match for the neutral. 


Have a great day…



-  09.00 German IFO

-  09.30 Norges Bank rate announcement

-  11.00 CBRT rate announcement

-  13.00 SARB rate annuoncement

-  13.15 ECB rate announcement

-  13.30 US GDP, durable goods, core PCE, initial jobless claims

-  13.45 ECB press conference

-  15.00 US new home sales

-  16.00 ECBs Lagarde speaks

-  23.30 Japan Tokyo CPI

-  00.01 UK GfK consumer confidence



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