May 23, 2024 09:08 GMT
EUR/GBP Decline Slows as UK PMI Underwhelms
FOREX
- European PMI data has dictated play across Europe, with the services sector edging below expectations while manufacturing was firmer, but off a lower base. UK PMI numbers were a particular point of weakness, and helped slow the recent decline in EUR/GBP, which broke through support after UK CPI data yesterday.
- The leaves GBP among the poorest performers in G10, while JPY trades similarly weak. Asset price volatility has hit new lows, with S&P500 implied vols hitting new multi-year lows today helping markets lean further on carry trades and weigh on funding currencies. The JPY trade-weighted index touched a new post-intervention low as a result, narrowing the gap with the April low to ~1.5%.
- The USD Index has faded off the 50-dma resistance of 104.973, which remains key resistance for the bounce off May lows. The Fed minutes out late yesterday underpinned a minor rally in the greenback, but momentum has not been sustained into the Thursday US open.
- Focus for the session ahead turns to the weekly jobless claims data and preliminary US PMI. Central bank speak is led by BoE's Pill and ECB's Villeroy. Fed's Bostic makes an appearance, but is not expected to speak in depth on monetary policy.
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