Key Points:
• Time to take stock on GBP?
• BoE surprise with a 0.25% hike
• EU GDP in focus today
Recap
Another interest rate decision and another surprise hike. The Bank of Canada elected to hike by 0.25% yesterday, citing that the economy is still running too hot with a tight labour market and inflation running stubbornly high. Market pricing for additional hikes also increased, with the end of the year pricing now suggesting interest rates to be at 5.13%. CAD gained across the board as a result, and GBPCAD is now 3% off the highs seen in May and now back at the lows see in April. The hawkish message spread amongst the markets, with markets adding to rate hike expectations from the BoE, ECB, and the Fed. US treasuries continued to climb as a result invoking some demand for USD. Market pricing for Fed rates by year-end is now near enough 0% – a sharp reversal from pricing in March and April which factored in 0.90% worth of rate cuts.
Today’s Overview
All eyes on the EUR and revisions to growth data from the first quarter of this year, with expectations for a lower revision of 1.2%. The weakness that we saw on the EUR in May has reduced so far in June, with markets seeing current levels as an opportunity to buy EUR at a relative discount to the recent highs the currency has made in 2023. A stronger than expected GDP number will likely encourage more EUR buying, and suggest that the next indicated 0.25% rate hikes by the ECB will happen in coming months. The weekly jobless claims from the US will also be in focus, and any reduction in numbers should continue to support USD.
Equals Market Analysis– 08th June 2023
Today’s Rates
Today’s Interbank Rates at 09:23 am against GBP movement.
GBP>EUR – 1.1630
GBP>USD – 1.2406
EUR>USD – 1.1071
GBP>CAD – 1.6625
GBP>AUD – 1.8649
GBP>SEK – 13.558
GBP>AED – 4.5762
GBP>HKD – 9.7670
GBP>ZAR – 23.632
GBP>CHF – 1.1328
Today’s Calendar
· EUR Gross Domestic Product s.a. (QoQ)(Q1)
· EUR Gross Domestic Product s.a. (YoY)(Q1)
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