Markets steady ahead of ECB rate decision
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Daily Currency Update
It’s been a relatively quiet start to the week with markets appearing to be in a holding pattern ahead of tomorrow’s interest rate decision from the European Central Bank. The ECB is expected to produce the first cut in its main refinancing rate since 2016. While this rate reduction is all but guaranteed, the main area of attention will be the accompanying commentary about the future path of interest rates.Given that Eurozone inflation drifted higher last month, many expect the path lower in rates to be gradual to ensure that price rises do not flare up again. The decision to lower rates could be welcome, especially since it is happening in an environment of an improving economy. As a result, it may not be as detrimental to the euro as in previous cutting cycles. GBP/USD is currently around 1.2775, GBP/EUR at 1.1745, and EUR/USD at 1.0875, with little movement in any of the pairs over the past 24 hours.
Key Movers
The one notable piece of data from the United States yesterday came from the latest Job Openings and Labor Turnover Survey, which fell short of expectations. The report, providing figures for April, revealed 8.06 million new job openings for the month—lower than the forecasted 8.37 million and down from the previous reading of 8.36 million. This once again highlights a slowing job market, reflected in the recent uptick in the unemployment rate to 3.9%. Despite the release, markets remained relatively unchanged, as attention is currently focused on the ECB rate decision. However, the spotlight will soon shift to Friday’s US May Non-Farm Payrolls figure, which is expected to show little change from the previous month’s forecast of 175,000.Expected Ranges
- GBP/USD: 1.2695 - 1.2815 ▲
- GBP/EUR: 1.710 - 1.775 ▲
- GBP/AUD: 1.9105 - 1.9260 ▼
- EUR/USD: 1.0810 - 1.0915 ▼