Hawkish BoE Needed For Struggling Sterling
The coming week could offer some salvation for the British Pound with the central bank meeting on Thursday. Slight whispers of a potentially larger than expected rate hike have started to circulate to counter the ever-rising rate of inflation. On the flip-side, an expected 25 basis point hike or a dovish stance from the central bank could sink the pound even lower.
The BoE meet will be the main event for Sterling as we begin a new month with the size of the hike, the vote composition of the Monetary Policy Committee and the guidance on the outlook deciding where the Pound ends next week against its counterparties.
Ahead of the May policy update, Pound sterling has been under immense pressure against the Dollar, whilst also losing value to the majority of the G10 currencies over the past week. Poor data and slower economic growth have hampered the UK alongside the tensions in Ukraine still keeping the US Dollar strong thanks to its safe-haven nature.
In level terms, EUR/USD opens this morning up near the midpoint of 1.05-1.06 with Cable (GBP/USD) regaining the 1.25 handle. The GBP/EUR has also picked up somewhat to trade circa 1.1885 having picked up some overnight strength.
Datawise and on the docket today we have the first reading of Q1 GDP in the Eurozone with Flash Eurozone HICP inflation data for April also due. Across the pond and in the US, Core PCE Price index may garner attention.