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Sterling Stabilises After Tuesday’s Strong Gains

April 24, 2024

Sterling stabilises after Tuesday’s strong gains, fueled by above-forecast U.K. purchasing-manager surveys, Bank of England signals that it isn’t in a rush to cut rates, and a weaker dollar. The currency’s performance reflects heightened market attention to central bank signals and economic data. The GBP/USD edged down 0.1% to 1.2436, while EUR/GBP remains steady at 0.8595.

Bank of England’s Stance on Interest Rates

Bank of England’s chief economist Huw Pill’s recent remarks highlight the central bank’s caution before considering easing monetary policy.

Despite a segment of policymakers dissenting against early rate cuts, the majority’s hesitance suggests a continued tight monetary stance in the near term.

GBP/USD and EUR/GBP in the Spotlight

The slight decline in GBP/USD and the stability of EUR/GBP indicate a market digesting recent economic inputs and central bank communications.

Comparing this situation to late 2016, when the sterling found a temporary footing after considerable post-Brexit vote losses, current stability might be short-lived if upcoming economic data shows unexpected weaknesses.

Bunzl and Lloyds Banking Maintain Guidance

Bunzl reported a revenue fall in Q1 but reassured investors by backing its full-year guidance. This move, reminiscent of its 2019 performance recovery, suggests Bunzl’s management has a confident outlook on operational rebound.

Lloyds Banking Group‘s announcement of maintaining full-year guidance, despite a slower-than-expected decline in net interest margin, points to a cautious optimism. 

Abrdn, Aviva Show Varied Performance

Abrdn’s increase in client assets and Aviva’s aggressive growth in its health business underscore a potentially shifting landscape in financial and health sectors. Abrdn’s return to quarterly reporting could enhance transparency and reduce earnings risk, recalling the positive reception to similar strategic shifts in other asset management firms during late 2010.

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