Heading towards parity?
16 May 2022The Pound to Euro exchange rate closed 1.07% last week higher after reaching its lowest level since October 2021. Meanwhile, the Euro to US Dollar exchange rate briefly break below the 1.04 level for the first time since January 2017, heading closer toward parity...
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Recession warning
09 May 2022The Pound closed 1.8% lower versus the Euro last week in its worst-performing week since April 2021. While major central banks around the world are looking to tighten their monetary policy, the European Central Bank is still treading with caution. Out of the G10 economies, the ECB, along with the Bank of Japan and Swiss National Bank, are the only ones not to have made a move as of yet to battle inflation...
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‘Forcefully if needed’
03 May 2022Bank of Canada Governor Tiff Macklem stated that ‘inflation is too high’ and higher interest rates would be needed. This comes after a half-percentage-point increase in interest rates at the BoC’s last meeting. Macklem went on to say that the central bank is willing to implement inflation-cooling measures ‘forcefully if needed’ after consumer prices hit a whopping 6.7% in March.
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Leaning toward a hike
25 Apr 2022The New Zealand services sector also showed an upswing in March. Meanwhile, the Reserve Bank of Australia released its meeting minutes last week, showing that policymakers were leaning toward an interest rate hike—upcoming inflation and wage data will be in close focus while policymakers weigh their options...
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BoC raises rates
19 Apr 2022Last week, the Bank of Canada decided to hike interest rates from 0.5% to 1.0%, while also announcing the beginning of quantitative tightening. BoC Governor Tiff Macklem spoke in a press conference, saying: 'Canadians should expect the overnight rate to rise toward the bank's assumed 2-3% neutral range', signalling more...
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Rate hike expected
11 Apr 2022The Bank of Canada is expected to hike interest rates on the 13th April, with expectations for a rise from 0.5% to 1.0%. Canada has produced some robust labour market data of late, with stats showing unemployment reaching its lowest levels since the data began in 1976...
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GBP/CAD hits weakest since 2019
04 Apr 2022The Pound to Canadian Dollar exchange rate closed just 0.16% lower and hit its weakest level since October 2019 last week. Today, Canadian Building Permits stats came in at 21.0% in February, following on from January's positively revised -8.20%. Canada will also release high-priority Balance of Trade, Employment Change, Unemployment Rate, and...
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UK inflation hits 30-year highs of 6.2%
29 Mar 2022Last week, UK inflation reached 30-year highs of 6.2% in February, increasing from 5.5% in January. With rising petrol prices, the hospitality sector's VAT returning to 20%, and the April inflation cap taking effect, it's expected households will be squeezed even further. BoE policymaker Ben Broadbent will speak in the week ahead, while UK house prices and mortgage approvals numbers will also be released...
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UK and US hike rates
21 Mar 2022The Pound recovered from a 16-month low versus the US Dollar last week, as both UK and US central banks tightened monetary policy. The Bank of England chose to hike interest rates last week to 0.75% as inflation continues to soar in the UK. BoE policymakers voted 8-1 to hike interest rates by 0.25% in what was the first time in over two decades policymakers have increased borrowing costs at three successive meetings...
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GBP/USD hits lowest level since November 2020
14 Mar 2022Against a host of currency majors, the US Dollar managed to climb further last week as geopolitical risks continued to encourage a flight to safety. The Pound to US Dollar exchange rate closed 1.61% lower, reaching its lowest level since November 2020, when Brexit negotiations took place. One of the main focus points in the coming sessions will be the Federal Reserve's interest rate decision and the Federal Open Market Committee's Economic Projections...
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Safe-haven and commodity currencies surge
07 Mar 2022One of the main drivers of the currency market at the moment is the Russia-Ukraine conflict which is causing a flight to safety and is boosting safe-haven currencies such as the US Dollar against other majors. The Euro is a casualty of the safe-haven demand with investors selling off the single currency. Meanwhile, a surge in commodity prices has increased demand for currencies such as the Aussie Dollar, New Zealand Dollar, and Canadian Dollar.
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Commodity currencies receive a boost
28 Feb 2022Last week, the Reserve Bank of New Zealand increased interest rates once again in line with economists' forecasts. This week, the Reserve Bank of Australia is scheduled to meet, but markets expect interest rates to remain at 0.10%. Commodity currencies have received a boost against other majors on the back of the Russia-Ukraine conflict and the increase in commodity prices. The Pound to Australian Dollar exchange rate closed the week 2.18% weaker, and registered nine-week lows...
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A significant pivot
14 Feb 2022Sterling fell 0.65% against the Aussie Dollar last week despite dovish comments from Philip Lowe, Governor of the Reserve Bank of Australia. He hinted at the possibility of an interest rate hike later this year, but with moderate wage growth and inflation, monetary policy is unlikely to shift in the first half of the year. Lowe's comments came as a significant pivot from the central bank's former stance of a rate hike occurring in 2024. Meanwhile, the Pound drifted 0.35% lower against the Kiwi last week amid wage growth concerns and the cost-of-living crisis...
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Pound climbs versus AUD and NZD
07 Feb 2022The GBP/AUD currency pair has moved 2.5% higher since the start of the year as the Bank of England presses ahead with monetary policy normalisation. The Reserve Bank of Australia has ended its pandemic bond-buying programme but is not expected to raise rates this year. However, Governor Phillip Lowe has opened the door to a potential rate rise in late 2022 if the labour market and inflation align with targets. Meanwhile, the Pound has gained around 3.5% against the New Zealand Dollar since the beginning of the year, the pairs' highest level since May 2020. This comes despite the market expectation of a 2.0% cash rate in New Zealand by August 2022...
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On a high
31 Jan 2022The GBP/EUR exchange rate has approached levels not seen in five-and-a-half years, at around 0.53% off the interbank level traded in July 2016 post-Brexit. The Euro continued to trend lower last week as monetary policy divergence continued to drive a wedge between the Eurozone and other major economies. The European Central Bank is set to make its latest monetary policy announcement this week with no changes expected. Meanwhile, other central banks such as the Bank of England and the US Federal Reserve are taking action in what some believe is a small window to act. In the week ahead, Eurozone inflation will be released, which will be watched closely by those interested in the Euro...
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Hikes on the horizon?
24 Jan 2022Last week, Canada's core inflation number jumped to 30-year highs at 4.00%. In the week ahead, the Bank of Canada's interest rate decision and Monetary Policy Report release will be the most important event, especially in light of recent inflation numbers. Economists expect the central bank to keep rates on hold at 0.25%, but some have suggested the bank could begin hiking rates sooner rather than later...
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Markets suggest a 75% chance of a rate hike
17 Jan 2022The Pound retained strength last week and has climbed to be 1.50% higher versus the US Dollar this year so far while claiming gains of 0.40% versus the Euro in 2022. Data released last week showed that UK growth reached levels seen before the pandemic in November, placing more pressure on the Bank of England ahead of its next monetary policy meeting in February...
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Canadian labour data boosts Loonie
10 Jan 2022Sterling managed to climb against the Canadian Dollar last week, reaching its highest level since October 2021 and closing 0.46% higher. However, against the US Dollar, the Canadian Dollar strengthened last week. An upbeat Canadian jobs report showed that 54,000 jobs—twice as many than had been predicted—had been added in December, while US labour market data disappointed. Additionally, the Canadian Unemployment Rate stat reached 22-month lows. The Canadian Dollar hadn't rallied earlier in the week when oil prices climbed, but the news of a strong labour market enabled the Loonie to notch some gains against its US counterpart. Only low-tier data will be released in the week ahead, leaving the Canadian Dollar to fluctuate on other geopolitical developments...
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The Pound near two-year highs
04 Jan 2022The Pound has begun 2022 on a positive note, trading above $1.35 against the US Dollar and near two-year highs against the Euro, at interbank levels of €1.1990 today. Sterling's been enjoying a rise following the Bank of England's December interest rate decision to raise rates to 0.25%. Markets expect further action by the central bank, which could bolster the British currency higher. Additionally, investors seem to be confident that there won't be any additional imminent restrictions in the UK, giving the economy more opportunity to grow as the seemingly less severe Omicron variant spreads. UK house price and construction stats will be released in the week ahead...
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Retaining gains
20 Dec 2021The Canadian Dollar has retained some of its gains this year on the back of inflation, solid employment, and energy self-sufficiency. Data out this week will include the October Canadian Retail Sales stat, Average Weekly Earnings, and Gross Domestic Product figures, as well as the November New Housing Price Index...
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Inflation registers fastest increase
13 Dec 2021Last week, the Bank of Canada kept interest rates on hold at 0.25%, in line with forecasts. However, BoC Governor Tiff Macklem suggested that while ongoing supply chain disruptions and higher energy prices continued, inflation was likely to remain at increased levels. October saw Canada record inflation levels of 4.7% while also registering its swiftest increase year-on-year in 18 years. The central bank expects consumer prices to continue accelerating in the first half of 2022 before falling back in the second half. Some influential events are scheduled for Wednesday this week, with inflation numbers due for release and a speech by Governor Macklem...
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Inflation forecast to reach 40-year high
06 Dec 2021The Pound to US Dollar exchange rate briefly dipped below the 1.32 mark for the first time since December 2020 and closed the week 0.66% lower last week. Some of the key pieces of data in the week ahead will be inflation figures, which are expected to come in at the highest number in 40 years. The annual inflation stat is forecast to reach 6.80% year-on-year in November, which may bolster market expectations for an interest rate increase and quicker bond tapering—particularly after Friday's employment data missed expectations with the number of people entering the workforce coming in at 210K—significantly below the 550K forecast. However, unemployment fell, and labour market participation is at its highest since the pandemic. Meanwhile, Federal Reserve Chief Jerome Powell seems to be taking a hawkish outlook—a slight change in his language surrounding inflation and supportive policies created some larger market movements...
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Risk-off sentiment sweeps market
29 Nov 2021Last week, the Pound to US Dollar exchange rate reached its highest level since December 2020, before closing 0.91% lower. Meanwhile, against the Euro, the Pound touched its highest level since February 2020 and closed 1.12% lower...
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Another rate hike?
22 Nov 2021Strong inflation and employment data out of the UK have increased the likelihood of a rate hike by the Bank of England in December, while the Reserve Bank of Australia is unlikely to raise rates next year, according to Governor Phillip Lowe. This policy divergence is arguably the most significant contributor to the pairs’ recent move higher...
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Inflation data expected to climb
15 Nov 2021Last week, the Pound to Canadian Dollar exchange rate touched its lowest level since March 2020 but finished the week 0.32% higher. It could be an interesting week for Canadian data, with inflation stats due for publication. Expectations are for a climb in consumer prices on the year in October, from 4.4% to 4.7%, a 0.7% climb on the month. Retail Sales and housing data will also be out later in the week...
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Who has the best-performing currency?
08 Nov 2021The Canadian Dollar is 2021's best-performing G10 currency and has the potential to gain further in the coming months as higher oil prices continue, and the Bank of Canada takes on a more hawkish tone. The Canadian currency has climbed by around 2.6% so far this year and reached a six-year high versus the US Dollar in June. It's an incredibly quiet week ahead in terms of Canadian data. The only things worth noting are Bank of Canada Governor Tiff Macklem's speech and the BoC Senior Loan Officer Survey...
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To hike, or not to hike
01 Nov 2021Last week, the Pound softened against other currency peers but briefly reached above interbank levels of 1.19 against the Euro and 1.38 versus the US Dollar. The British currency has been bolstered in recent trading by increased expectations for an interest rate hike by the Bank of England. Therefore, one of the main events for the week ahead is the Bank of England's interest rate decision. Markets anticipate a 12 basis point increase this week and a bigger 25 basis point rise in December. Later in the week, more BoE representatives will speak, and markets will likely review their comments carefully...
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A very uncomfortable place
25 Oct 2021Last week, UK inflation data just missed expectations. The Bank of England's new Chief Economist, Huw Pill, has suggested that UK consumer prices could rise by 5.0% or more by early 2022, adding: 'That's a very uncomfortable place for a central bank with an inflation target of 2.0% to be.' One of the main events in the week ahead will be the UK Budget announcement by Chancellor Rishi Sunak. It's expected more funding will be pushed in the direction of the NHS as the UK prepares for a tough winter with Covid cases on the rise. The Pound may fluctuate on central bank speculation in lieu of any high-tier data in the week ahead...
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One-year high
18 Oct 2021Last week, the US Dollar hit a one-year high against a basket of other major currencies as markets anticipated the Federal Reserve would begin tapering its monetary stimulus next month. Additionally, safe-haven assets were in demand, which helped boost the US Dollar, as rising energy prices also concerned investors. The Pound managed to reach four-week highs versus the Buck. In the week ahead, US industrial data will be released, as well as housing, building, and mortgage stats. In addition, influential manufacturing data will be released...
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Best performance since August
11 Oct 2021The Pound put in its best performance since August last week against a basket of other majors. It closed 0.5% higher on a trade-weighted basis as markets anticipate an earlier interest rate hike by the Bank of England. While Cable had fallen by 2.0% in the week before last, last week, the GBP/USD currency pair reached interbank levels of 1.3657. UK issues in recent weeks have consisted of the energy crisis and labour shortages. However, Bank of England representatives have suggested rate hikes will be needed in order to battle spiralling inflation. In the week ahead, unemployment and industrial data will be released, which could influence the Pound exchange rate.
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Touching four-week highs
27 Sep 2021Last week, the Pound to Australian Dollar exchange rate reached four-week highs before finishing 0.43% lower. Meanwhile, Sterling traded flat against the New Zealand Dollar, closing just 0.06% softer after recovering from two-week lows. Australian retail, building, and manufacturing data will be released in the week ahead, while New Zealand will publish both business and consumer sentiment stats. Meanwhile, Australia and New Zealand's largest trading partner, China, will also release data, in the form of manufacturing figures. These can often be influential, for the Australian Dollar in particular, as one of Australia's most significant exports is iron ore...
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All eyes on the central banks
20 Sep 2021Last week, the Pound slipped versus the US Dollar, falling by around 0.75%, hitting its lowest levels in about a month. In recent sessions, risk sentiment has been ebbing, causing more popularity for the US Dollar; this week, the focus has turned to central banks. The Bank of England's Monetary Policy Committee is due to meet on Thursday. Markets will be watching to see if any hawkish comments materialise that could suggest changes to interest rates could be on the horizon. UK inflation levels hit their highest on record in August, and with two new members on the committee, there's the potential for some change in language. UK data for manufacturing and services stats will be released in the week ahead, followed by consumer confidence later in the week...
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Rates on hold
13 Sep 2021The Pound closed 1.19% higher on the week against the Canadian Dollar last week. Meanwhile, the Bank of Canada opted to keep interest rates on hold at 0.25%, in line with expectations. Canadian labour market data showed levels of unemployment sank lower than forecast, despite the number of people entering the workforce falling short of predictions. In the week ahead, Canadian inflation data will be the main event on the economic calendar for those interested in the Loonie...
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Softening on sentiment
06 Sep 2021The Pound reached three-week highs versus the US Dollar last week, closing the week 0.87% higher. The Stateside currency has continued to soften as risk sentiment improves and US data falls below expectations. The highly influential US Non-Farm Payrolls reading came in at only 235K in August, despite forecasts for a much larger 720K reading. The Delta Coronavirus variant is hindering economic activity in the US, and the weaker US jobs figure is a blow to the Biden Administration, which has already felt the heat from criticisms over the handling of the Afghanistan withdrawal. Additionally, President Biden will be considering who to appoint as the head of the Federal Reserve and whether to re-nominate Jerome Powell...
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Breathing room
23 Aug 2021The Pound experienced losses against the US Dollar and Euro last week but managed to achieve some highs against other majors elsewhere as commodity prices fell. Last week, UK inflation levels edged lower, which should give the Bank of England some breathing room on the topic of monetary policy in the immediate future. In the week ahead, UK manufacturing and services stats have already been released—manufacturing beat expectations, but services came in below forecasts—but there's little data of note out in the remainder of the week, leaving Sterling sensitive to geopolitical developments...
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Important inflation data ahead
16 Aug 2021The Pound had a slightly negative week last week, as it ended lower following Thursday’s GDP growth report. The report has further reduced the prospect of an earlier-than-expected interest rate hike in the UK, which is currently forecast for the end of 2022. Wednesday will see the release of the latest inflation report, with a slight drop from last month’s headline inflation level of 2.5% is anticipated. However, any surprise reading above this level would likely mean a return to speculation about an earlier-than-expected interest rate increase. This, in turn, could see Sterling recover some of its recent losses...
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Rate hike ahead?
09 Aug 2021The central bank hasn't hiked rates since mid-2014 and cut rates to record lows of 0.25% last year as central banks worldwide reacted to the impact of Covid with emergency cuts. No central banks from developed countries have yet increased rates since the pandemic began, but the strength of New Zealand's economic resilience has raised expectations for a policy change...
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GBP/EUR reaching 16-week highs
02 Aug 2021Last week, the Pound to US Dollar exchange rate had its best-performing week since February, closing 1.12% higher and reaching five-week highs. Today, highly influential US manufacturing data will reach the market, before Friday's slew of high-tier US labour market data...
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Learning from mistakes
27 Jul 2021The Euro softened after European Central Bank President Christine Lagarde stated that the central bank had learned from previous economic events and wouldn't be withdrawing its support measures too soon...
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4.0% climb
19 Jul 2021The US Dollar has been climbing in recent weeks, rising by around 4.0% on a trade-weighted basis since May to reach its strongest levels since the start of April. Generally, markets are anticipating that the Federal Reserve will be looking to tighten monetary policy soon. The risk-off mood of the market is likely to support the Dollar further. However, with many Americans hesitant to get the vaccine, the economic recovery could be in jeopardy. It's estimated only around half the population has received two vaccines. It's not a heavy data week, and the services and manufacturing stats due for release on Friday are likely the most influential for the week...
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