GBP

Forward guidance driving Pound pricing

The Pound fell against a host of G10 major currencies last week. Sterling closed 0.61% lower against the US Dollar after failing to reach the 1.32 figure. Meanwhile, versus the Euro, the Pound traded within a three-cent range throughout the week but closed just 0.03% lower. Bank of England Deputy Governor Ben Broadbent warned other BoE policymakers with the suggestion that the bank's forward guidance is driving aggressive market pricing. The central banker said that there should be more focus and dependence on economic data, rather than the bank's policy guidance. At present, five 25 basis-point interest rate hikes are priced in before November, with UK inflation forecast to reach lofty levels of 8.0% in the next few months. BoE Monetary Policy Committee members will be speaking in the week ahead, and data, including services, construction, and house price stats, will be released.

EUR

Above the $1.10 level 

The Euro has softened today but remained above the $1.10 handle versus the US Dollar in early trading after strengthening in recent sessions. Eurozone inflation has reached levels of 7.5% on the year in March. The European Central Bank expects consumer prices will keep rising as the Russian invasion of Ukraine continues, creating higher energy prices and supply chain issues. Market forecasts suggest the central bank will hike interest rates by 60 basis points in the rest of the year as more hawkish bets are placed that policymakers will need to adjust monetary policy to support the Euro. The Economic and Financial Affairs Council (ECOFIN) will meet on Tuesday, while the European Central Bank's monetary policy meeting accounts will make their way onto the market on Thursday. 

USD

Increasing bets 

The US Dollar has been trading higher against a basket of other major currencies as markets anticipate a higher chance of a 50 basis-point interest rate hike by the Federal Reserve in future meetings. Investors are increasing bets following robust labour market data from the previous few months. The US economy added 431,000 jobs in March, which although below forecasts, is still a substantial number in an already tight labour market. Services and weekly unemployment claims figures will be released in the week ahead. The Federal Open Market Committee meeting minutes from the March policymaker meeting will also be released, and three policymakers will be speaking throughout the week.

AUD and NZD

Sterling dips against Aussie and Kiwi 

The Pound to New Zealand Dollar exchange rate closed 0.24% lower last week and reached its lowest figure since January 2021 as commodity currencies continued to find favour. Meanwhile, against the Aussie, Sterling closed 0.49% lower and reached its lowest level since December 2018. Today, Australian Retail Sales numbers have printed in line with forecasts; other data due out from Australia this week will include services, trade balance and building permits stats. The Reserve Bank of Australia will also release its latest interest rate decision, with forecasts to remain at 0.10%. It's a very quiet week for New Zealand data, meaning the Kiwi Dollar may be sensitive to commodity price changes and any geopolitical developments.

CAD

GBP/CAD hits weakest since 2019 

The 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 earnings stats this week which could influence the way the Loonie trades, alongside commodity prices which have recently been accelerating.