We expect the start of the rate-cut cycles in 2024 to be mildly negative for both EUR and GBP, even if markets have currently priced in rate cuts, as they had been in previous cycles.

We expect the first rate cut from the Fed and the ECB in June, while August is more likely for the BoE. Neither the ECB nor the BoE is likely to deliver idiosyncratic rate cuts, but both could end up with a more dovish cycle than the Fed, weighing on their currencies.

At the same time, the global economy is expected to slow this year, so risk sentiment is unlikely to improve significantly. As such, support for both currencies is set to be limited.

Given the circumstances, we expect both the EUR and GBP to weaken modestly against the USD in 2024.