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Market Update

• Posted by currencies in GBP, Sterling, UK, Uncategorised
• January 26, 2024
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For its fifth consecutive week sterling gains against the EUR – reaching a high of 1.1730. This is the highest level GBP/EUR has reached since back in September 2023. The latest development to this movement is from yesterday’s European Central Bank meeting. There was no surprises on the decision to leave interest levels untouched at 4.5%. In the commentary afterwards Christine Lagarde did say that there is a potential different outcome than what was said in the last meeting in December. She did not rule out that a rate cut could commence in April. December’s forward guidance indicated that this would start in the summer period. Now there is a possibility that this will happen earlier and if ECB would go ahead in April, it’s very likely that they will be the first Central Bank out of the three (European Central Bank, Federal Reserve and Bank of England).

EUR/USD saw market movements too, with an additional economic release to factor in. GDP growth rate for Q4 for the US, did not decline so steep as forecasted for the quarter. GDP figures in the US are carried by 68% weight of personal consumption expenditure. Indicating a resilient and better than expected performing economy in the US. Yesterday EUR/USD touched 1.0813, its lowest rate for 2024.

Performances across the currency pairs so far in 2024 we can come to one conclusion, current market situation is not favouring the EUR. GBP/EUR is up 1.73% year to date. While the USD has outperformed the European currency by 1.92% during the same timeframe. Later on today we have PCE (personal consumption expenditure) for the US in December. Currently expected to be unchanged from November. If figures suggest either an over- or underperformance we could see market volatility on the EUR/USD this afternoon.

The current development on exchange rates has shaped the best investment opportunities for UK buyers since back in September 2023. US investors do see the best purchase opportunity for 2024 yet.