May Meetings
Between now and the first two weeks of May, there will still be a number of good opportunities for price adjustment. However, given the data calendar and current market positioning, it seems most likely that such volatility would be driven by investors’ expectations surrounding the set of central bank decisions in early May. This week in particular, with the exception of UK inflation, has a relatively sparse set of data releases. What it may lack in data it could certainly make up for in central bank speakers with key Fed and ECB policy makers due to speak ahead of their next decision on May 3rd and 4th respectively.
Currently the market is priced in a rather balanced but still interesting place. For these Fed and ECB meetings in the first week of May, and the BoE decision the week after on the 11th May, the market is pricing on average of 25 basis point worth of hike from each central bank. You could be right in thinking three key central banks moving in lockstep is not so remarkable. However, given the relative inflation paths each economy has taken to get here and how much consensus on the respective May meetings has changed in recent weeks, such symmetrical pricing is surprising.
Of the three banks, the ECB is currently priced as the most likely to out perform the 25-basis points expected from it. Speeches from policy markets and notably President Christine Lagarde later today will be watched closely to gauge appetite for such a move. Failure to hang onto residual hawkish expectations for the May meeting could leave the Euro vulnerable particularly given the drop in EURUSD late last week. For the UK, it will depend on the inflation data and whether a drop back below 10% is confirmed and deemed sufficient to justify a pause in the rate hiking cycle. UK inflation data will be watched closely and will be critical to GBP as investors adjust their May policy forecasts.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Defiance
Charles Porter
Tue 12 May 2026
Defiance Yesterday’s market was defying one of two things: logic or gravity. Come to think of it, perhaps both. Take cable, GBPUSD, yesterday. The key events beyond minor data releases centred around any chatter from either side of the Iranian conflict and Starmer singing for his supper. Sing he did and tweet the President did, […]
Daily Brief – A technicality
Charles Porter
Thu 25 Jun 2026
A technicality Markets appeared to be fatigued by Trump’s Iran war before a ceasefire had even been agreed. This was evident from pricing that would have been considered complacent should the conflict have dragged on longer than it ultimately did. Now, that saga is far from over – it’s inevitable, for example, that as the […]
Daily Brief – Short-lived relief rally
Charles Porter
Tue 19 May 2026
Short-lived relief rally A tantrum in the bond market has continued to erode away at risk conditions in recent sessions. In the UK, the sell-off in gilts and corporate bonds has been particularly acute thanks to heightened political instability, the origins of which we have covered thoroughly in recent briefings. Yesterday, headlines delivered enough optimism […]
