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  • richard evans

GBP up, but EUR struggles on weaker than expected inflation readings

Good morning

Its June already! Just a month until the end of H1. Where has that gone?

GBP continues to make ground with GBPUSD up at 1.2430 and GBPEUR up at 1.1635, the highest level since mid-Dec 2022 when both BoE and ECB raised rates but ECB sounded more hawkish and sent GBPEUR lower. And where was GBPUSD back around then? 1.2430, just where we are now. Not that this is overly significant but interesting nonetheless.

GBP is up against other majors, GBPAUD is at 1.9125, approaching the Jan 2022 highs that came in just above 1.9200 before the pair fell 2000 points to the 1.7200 area. Prior to Jan 2022, we look back to May 2020 for anything higher, the start of Covid lockdowns in March 2020 saw the pair up to 2.0800 or so. GBPNZD is up at 2.0700, actually marking a high since the April 2020. Mind you both GBPAUD and GBPNZD are still at relatively low levels if you look at a longer term chart, up above 3.0000 and 3.7000 respectively since the turn of this century.

EUR has been held back by a raft of weaker inflation readings, yesterday it was Germany that reported HICP at 6.3% from an expected 6.8%, we do have the EU reading later this morning and after that weak German, and French and Spanish readings, it would be surprising if this managed to reach expectations. As such, the market is thinking ECB rate rise pricing is too rich. EURUSD still 1.0675, but losing ground to GBP. Lagarde speaks half an hour after the EU inflation release.

From the US, we had the JOLTS employment data yesterday, we know the Fed watch this one, it came in stronger than expected although comments from a couple of Fed officials did still seem to point at a pause in rate rises in June. They did however make clear that a pause does not mean they are finished in this cycle, preferring to call it a ‘skip’ rather than a ‘pause’. Also from the US, the House has approved the debt limit deal, now just the Senate to go. Should get finalised just in time to avoid a default.

In other news from our friends over the pond, I saw that NASA held a public briefing on UAPs, or Unidentified Anomalous Phenomena. UFO’s in other words. NASAs report said they have 50-100 new sightings each month but that most have an explanation. Many are simply mistakes or optical illusions, with one experienced pilot saying that what he thought was a UFO turned out to be someones Bart Simpson balloon. There are still many sightings that are harder to explain, perhaps because NASA may not have access to US military data and reports. NASA did say they need better quality data. Be interesting to see what this new department finds. If the UK sets up a similar branch, I might have to put my name forward.

Finally, congratulations to Seville who beat Jose Mourinho’s Roma in the Europa League final yesterday evening. Seville have now won it five out of the last ten seasons, quite an incredible feat. The match was a bad-tempered affair with 14 yellow cards being shown including one to Mourinho. It was pretty bad behaviour all-round and a bad advert for football.

- 09.30 UK S&P manufacturing PMI

- 10.00 EU HICP, unemployment rate

- 10.30 ECBs Lagarde speaks

- 12.30 ECB minutes

- 13.15 US ADP employment

- 13.30 US initial jobless claims

- 14.30 CAD S&P manufacturing PMI

- 14.45 US S&P manufacturing PMI

- 15.00 US manufacturing ISM

- 18.00 Feds Harker speaks

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