This week sees Central Bank decisions from UK, Australia, Brazil, Malaysia, Mexico & Sweden.

USD: Friday’s weaker than expected US jobs data followed weak Services data earlier in the week and has cast doubt over the underlying economic outlook for the USA. Due to this, the USD ended the week by falling against its peers but remaining within recent ranges. 

The jobs data showed fewer jobs created than expected and US unemployment rose to 3.9%. However, the market has not pulled forward expectations of a Fed rate cut (still expecting the 1st cut in September) because Prices Paid data shows inflation is sticky and the battle is not over. 

There are plenty of Fed speakers throughout the week to give us more guidance & possible volatility.

EURO: The ECB has a tricky task ahead, with the Eurozone economy broadly stagnant and inflation appears to be falling, but unconvincingly.  

However, the ECB continues to deliver hints of a June rate cut, which looks to be before the USD and this has kept EUR/USD lower, currently around 1.0650, but hit lows of 1.0620 on Friday. We have Eurozone Industrial Production later today. 

On Monday, Stournasras, a member of the ECB Governing Council, stated that there is a great chance of three rate cuts occurring this year. With the June cut fully priced in, the market is looking for guidance regarding the timing of the 2 later cuts. All of this is keeping EURO/USD lower, and helping GBP/EUR maintain high levels. 

GBP: Sterling had a very volatile week last week, but failed to break out of the monthly range 1.2250 – 1.2700. GBP/EUR remains tethered to the 1.1650 level and all eyes will be on Thursday’s announcement from the Bank of England. 

The BoE is expected to keep rates at 5.25% (for the 6th time). The market will be listening closely to the Press Conference that follows. Governor Bailey’s recent comments show that he is confident of inflation falling to the target of 2%. We will be listening for a timeline as to when the later rate cuts will happen – this could hurt GBP if the Bank agrees that inflation will fall quickly.