FX Market Brief: May 2024


Market Update May24

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  • The European Central Bank is widely estimated to start its monetary policy easing in June, with the market pricing-in a 94% chance of a 25-basis point rate cut, and at least two more by the end of the year.
  • In March, we had one of the strongest Services CPI on record at 4% (where it stayed for 5 months) but in April, we finally saw the gauge tick lower to 3.8% which many policymakers welcomed, and markets took it almost as a sign of a guaranteed June cut. Many services firms have stated on ECB’s latest telephone survey that they expect to moderate their price rises, which should give the central bank further confidence to cut interest rates.
  • Other key data such as wage growth should provide further tools for the ECB to start cutting. Wage growth data slowed towards the end of 2023 and should continue to do so this year as firms expect wage growth to feed less into prices than in 2023.
  • The euro-area managed to exit recession as four of its biggest economies (Germany, France, Italy, and Spain) grew faster than expected by economists. First quarter GDP increased by 0.3% from the three previous months, the strongest pace in one and a half years.
Date Country Economic Release/Event
15- May-24 Euro-Aggregate GDP SA OoO
15-May-24 Euro-Aggregate GDP SA YoY
17-May-24 Euro-Aggregate CPI YoY
17-May-24 Euro-Aggregate CPI MoM
23-May-24 Euro-Aggregate HCOB Eurozone Manufacturing PMI
29-May-24 Euro-Aggregate M3 Money Supply YoY
31-May-24 Euro-Aggregate CPI MoM


United Kingdom
  • The Bank of England is scheduled to meet on the 9th of May, where no changes to its interest rates nor the quantitative tightening programme are expected. The market continues to point to the first cut in August, with a 100.03% chance of a 25-bps cut at the time of writing.
  • The March meeting was interpreted by some investors as being dovish with hawkish officials Haskel and Mann switching their stance to “no change”, and the central bank stating that if it cut rates, it would still maintain policy restrictive enough to tighten the labour market, and contract wage growth and services inflation.
  • CPI and Wage data came in higher than expected in April, with services inflation falling only to 6% YoY from the previous 6.1% in February. On the pay data, wages grew at a pace of 0.9% MoM in February.
  • Confidence has increased across many sectors, and PMIs held up suggesting that the Q1 GDP print could recover strongly from last year’s recession. On the other hand, there was a softening of some labour data which hasn’t been paid much attention to, such as the unemployment rate ticking higher and a report on jobs showing weaker employment and wage growth.
Date Country Economic Release
09-May-24 UK Bank of England Bank Rate
10-May-24 UK GDP OoO
10-May-24 UK GDP YoY
10-May-24 UK Industrial Production MoM
14-May-24 UK Jobless Claims Change
22-May-24 UK CPI YoY
22-May-24 UK CPI MoM
22-May-24 UK CPI Core YoY
23-May-24 UK S&P Global UK Manufacturing PMI


United States
  • The Federal Reserve met at the May FOMC meeting and Fed Chair Jerome Powell pushed back on further tightening and flagged the importance of the US Labor market report to policymakers.
  • Jobs data released on the 3rd of May came in softer, with payrolls coming in way lower than expected at 175,000 versus est. 240,000. This drastic change in the labor market report led traders to pull forward their interest rate cut bets to September, from November. It is important to note that Powell suggested at the FOMC meeting that the central bank would be “prepared to respond to unexpected weakening in the labor market”, but obviously other factors enter the equation.
  • The focus now shifts to the US core CPI print on the 15th of May which in combination with a still-strong jobs report and sticky inflation will continue to support the “higher for longer” stance and continue to support the US Dollar.
Date Country Economic Release
10-May-24 US U. of Mich. Sentiment
14-May-24 US PPI Final Demand MoM
15-May-24 US CPI MoM
15-May-24 US CPI YoY
15-May-24 US Retail Sales Advance MoM
23-May-24 US S&P Global US Manufacturing PMI
24-May-24 US Durable Goods Orders
24-May-24 US U. of Mich. Sentiment
16-April-24 US Conf. Board Consumer Confidence
18-April-24 US GDP Annualized OoO



  • The outlook for the Euro continues to be daunting. We were trading near 1.09 at the beginning of April and dropped significantly to test the 1.06 level, and many suggest the pair should be even lower. It is true, the Euro has been resilient against a stronger greenback on the back of strong US Data and a dovish ECB, but this is mainly due to the market not so long ago expecting at least a cut by the Fed in the first half of 2024, which no longer verifies and that is why we broke through 1.07 – the market view on the Fed finally changed.
  • We continue to forecast a weaker euro, especially as the timing of rate cuts has widened between both central banks, as political tensions in the Middle East remain and ultimately affect oil prices and global risk sentiment.
  • Support: (S1- Key) 1.06, ( S2 – Key Support from Q123) 1.0520 , (S3) 1.0450
  • Resistance: ( R1) 1.08 , (R2) 1.10



  • There is little in terms of what the Bank of England will be able to deliver next week for Sterling and the only thing that should matter to GBP is any guidance on future rate cuts, and if more members of the central bank start to turn more dovish. Any dovish moves, either via speeches or via the minutes, should drive sterling lower but not significantly. We still believe this continues to be a US Dollar story, and unlike the Euro, bets for rate cuts are slightly less, with markets still not pricing two full rate cuts by the end of the year, which should help sterling not to depreciate as much as the euro.
  • Support: (S1) 1.23, (S2) 1.22, (S3) 1.20
  • Resistance:  (R1) 1.26, (R2) 1.2705, (R3) 1.280



  • The cross continues to be stuck in the 0.85-0.86 range and consolidates around 0.8550. We expect some downside on the pair especially as the ECB looks set to start cutting interest rates from June whilst the BOE looks less firm on its easing policy. All eyes will be on the BOE’s 9th of May monetary policy announcement and minutes, where policymakers are widely expected to hold interest rates at 5.25% for the sixth consecutive time.
  • Investors now expect three rate cuts by the ECB, especially as ECB’s Governor Stournaras clearly stated, “We now consider three cuts in 2024 as the more likely scenario.”
  • Support: (S1- Key) 0.8500, (S2) 0.8495
  • Resistance: (R1) 0.8645, (R2- Key) 0.87




For an analysis of your exposures and currencies mentioned in this FX Markets Update, schedule a call with a GPS FX advisor at www.GPSFX.com/book-a-call. 


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This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.

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About Francisco Mioludo


Francisco Mioludo is a trader for GPS Capital Markets at the London office. Before joining GPS, Francisco worked in Market Risk at a commodity trading firm in London where he gained valuable skills for his current role. Francisco looks after our EU and UK sales team with everything from analysis to structuring and pricing.