Friday 13/12/2024

John Hall • December 13, 2024

Daily Update 13/12/2024

Key Headlines:

GBP weakens due to a narrowing yield differential and signs of economic contraction.
Markets reduce expectations for the number of rate cuts by the ECB.

Recap

The EUR strengthened broadly yesterday after the ECB opted for a 25bps rate cut. Despite the removal of language describing rates as "restrictive," the meeting was perceived as less dovish than anticipated. Money markets adjusted accordingly, reducing expectations for 2025 rate cuts from 150bps to 125bps. This shift pushed GBPEUR down from its April 2022 high, while EURUSD stayed within its weekly range. Meanwhile, GBP weakened across the board due to a narrowing yield differential against other currencies.

Today’s Rates

Today's Interbank Rates at 09:31 am against GBP movement.

GBP>EUR – 1.2063

GBP>USD – 1.2632

EUR>GBP – 0.8290

EUR>USD – 1.0470

GBP>CAD – 1.7971

GBP>AUD – 1.9852

GBP>SEK – 13.903

GBP>AED – 4.6386

GBP>HKD – 9.8220

GBP>ZAR – 22.591

GBP>CHF – 1.1292

GBP>PLN – 5.1516

Today’s Key Takeaways

The UK economy contracted by 0.1% in October, adding pressure on GBP this morning.
Market pricing for UK rate cuts remains modest compared to Europe, but the gap between ECB and BoE expectations may be narrowing, reducing GBP's appeal.
Today’s weak growth data supports concerns about the UK's economic resilience.
GBPEUR remains below its April 2022 high.
The USD is gaining momentum as treasury yields stay strong.

13th December 2024

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