Synopsis: I
NG observes a fluctuating sell-off in the British Pound, influenced by recent economic data and upcoming reports. Despite a positive surprise in the UK's first quarter GDP for 2024, ING remains skeptical about its long-term impact on the Bank of England’s policy direction.
Key Points:
- Recent GBP Dynamics: The unexpected strength in Q1 2024 GDP provided temporary support to GBP, but ING doubts this will significantly alter the Bank of England's policy outlook, which remains oriented towards easing.
- Upcoming Data: Attention now turns to the March jobs data, though the Bank of England has reduced the emphasis on this in favor of inflation metrics, particularly the April services CPI due on May 22, which is seen as crucial for determining the timing of potential rate cuts.
- BoE Commentary: Market participants are also keen to hear any new insights from BoE Chief Economist Huw Pill regarding the timing of the anticipated easing cycle.
Conclusion:
While the recent GDP figure offered some respite, the overarching sentiment towards GBP remains bearish, with expectations for continued weakness over the coming quarters. The focus remains heavily on inflation data, which will be pivotal in shaping the Bank of England's upcoming monetary policy decisions. EUR/GBP is expected to find support in the 0.8550 to 0.8575 range amid these developments.