Sunday, June 16th 2024

Euro Update – 7 May 2024

It’s been a quiet data week for GBP ahead of the Early May Bank Holiday weekend, with today’s (Friday 3rd May) services industry data serving as the most notable. The UK service sector marginally beat forecasts, recording a reading of 55.0, noted as “a robust and accelerated upturn in business activity during April, supported by a renewed strengthening of order books.”
With key data releases in short supply this week, the market has shifted its focus to growth forecasts. The Organisation for Economic Co-operation and Development (OECD) signalled the sobering prediction that the UK will be the slowest-growing G7 economy in 2025. The think-tank also reduced its projection for the year ahead, citing an expectation of 0.4% “sluggish” economic growth in 2024, having previously published a forecast of 0.7% in February.
Next week, the Bank of England’s Monetary Policy Committee will meet on Thursday and vote on the official bank rate for the third time this year. A poll by City A.M. has revealed 57% of 21 economists surveyed estimate the BOE will start cutting rates in August, while 38% expect the first reduction in June. Current market expectations are for a sixth consecutive hold of the central bank’s base rate, at 5.25%.

It’s been a busier week of data releases for the Eurozone. On Tuesday, a slew of economic releases were published, starting with the German Consumer Price Index (CPI), which confirmed a reading of 2.2% on Tuesday. This represents no change from March but a dip from 2.5% in February.
A few hours later came growth forecasts from the Eurozone’s three other major economies, all of which beat their forecasts and contributed to the Eurozone posting growth of 0.3% between January and March. Welcome news for the ECB following two successive quarters of a 0.1% contraction.
Additionally, core inflation reduced from 2.9% to 2.7%, and headline inflation remained unchanged at 2.4% (0.4% off the ECB’s 2% target). This supports data released from Bloomberg last Friday (26th April), which inferred a possible stall in the slowdown of inflation for the first time this year.
The ECB’s next rate decision meeting is on June 6th, which also marks the start of the European Parliament elections.

None of the information contained in this document constitutes, nor should be construed as, financial advice.



Latest articles in this section

Euro Update – 4 June 2024

GBP The most significant news in the UK last week was Rishi Sunak’s unexpected move to call a snap election on 4th July. Speculation that the election would happen in

Euro Update – 30 April 2024

GBP The pound dropped to a fresh year low at the end of last week’s trading sessions versus the USD as the Deputy Governor of the Bank of England, Dave

Euro Update – 23 April 2024

GBP The latest GDP growth data for the UK was released on Friday. It shows that the UK economy grew 0.1% in February and 0.3% in January (revised up from

Euro update – 16 April 2024

GBP The latest GDP growth data for the UK was released this morning. It shows that the UK economy grew 0.1% in February and 0.3% in January (revised up from