Markets await key economic data in a quiet week
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Daily Currency Update
In Europe, the week began quietly, with much of the Continent observing a holiday yesterday. The Euro has shown firmness in recent price action, but without new economic data, it is struggling to gain ground against the Dollar and Pound.The Pound remained firm today against both the Dollar and Euro, trading within a tight range due to a lack of significant market-moving events. Despite this, the UK economy shows underlying strength, benefiting the Pound. However, technical analysis suggests the recent upward movement might be overextended, potentially leading to a slight retracement.
The U.S. Dollar traded within a narrow range on Tuesday, stabilizing as markets await new information on the timing and extent of expected Federal Reserve rate cuts later this year. There is still some uncertainty, as some Fed policymakers urge caution against reducing borrowing costs too soon, despite softer-than-expected consumer price inflation data.
Key Movers
In Europe, inflation has fallen sharply due to lower energy prices, which will likely support the ECB council's decision to cut rates in June. With limited market data available, the Euro is expected to trade sideways within a tight range until next week.In the UK, the Consumer Price Index (CPI) will be released tomorrow and is anticipated to create significant volatility for the Pound. This data will help markets refine their expectations for a possible rate cut by the Bank of England as early as June.
In the US, economists have observed that, in the absence of data releases this week, the Dollar's recent decline may pause. Positioning data from the Chicago Mercantile Exchange (CME) shows a significant increase in the purchasing of US Dollar "puts," indicating that market participants expect the Dollar to weaken further through the rest of May.
Expected Ranges
- GBP/USD: 1.2725 - 1.2800 ▲
- GBP/EUR: 1.1720 - 1.7665 ▼
- GBP/AUD: 1.9115 - 1.9175 ▼
- EUR/USD: 1.0830 - 1.0885 ▼