RedFX Snap: Weak UK data smashes GBP
GBP Special
Retail Sales disappointed markets, with a -1.4% decline in March
UK Services Business Activity Index read 58.3 – below the 60 expected
Although Manufacturing data beat estimates, We know the Bank of England is committed to raising rates through 2022, but we also know they are closely watching data in order to decide on the PACE of those hikes – weak data like this will continue to push GBP lower.
GBP/USD has slumped to 1.2875, having traded around 1.3050 yesterday afternoon.
GBP/EUR has not fallen as much because the EURO is also under pressure – GBP/EUR trading near 1.1920. This week also saw the ECB hint a rise in rates in the Eurozone in mid-2022 which means that GBP/EUR may struggle to maintain levels above 1.2050 through the year.
GBP/USD will remain the major victim of bad UK news as the US dollar remains supported by expectations for a more aggressive policy tightening by the US central bank. Yesterday Fed Chair Jerome Powell on Thursday confirmed a 50 bps rate hike at the upcoming policy meeting on May 3-4 and also hinted at consecutive increases this year.
For those of you looking to sell USD and buy GBP, locking in a proportion at these levels is worth a discussion – the last time the rate was this attractive was mid-October 2020!
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The RedFX Team