Waiting for rate hikes
Last week, the Pound showed some strength against some other currency majors, such as the US Dollar, Euro, and New Zealand Dollar. Sterling sentiment has been buoyed by hawkish comments from the Bank of England and expectations for interest rate hikes being moved forward. The week ahead could be interesting for Pound movement, with highly influential inflation data due for release. Other stats will include manufacturing, services, retail, and confidence numbers which could all play into the way the Pound trades.
GBP and USD touch 2020 highs
The Pound hit its highest level against the Euro since February 2020 last week, while the common currency also slipped to its weakest level since July 2020 versus the US Dollar. Data published last week showed a decline in economic sentiment in the Eurozone, as well as a downturn in the currency bloc's largest member, Germany. In the week ahead, inflation data could significantly influence how the Euro trades against other currency majors, followed by confidence and manufacturing numbers.
Last 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.
AUD and NZD
Aussie jobs remain robust
The Pound reached its lowest level since July 2021 versus the Australian Dollar last week, but managed to touch seven-week highs against the New Zealand Dollar. Last week, the Australian labour market remained robust as lockdowns in the nation's biggest city lifted, with only a slight rise in unemployment—sticking close to the lowest figure on record since the Global Financial Crisis in 2008.
In the week ahead, New Zealand inflation data will be released, as well as Australian manufacturing stats. Additionally, the Reserve Bank of Australia will publish its latest meeting minutes which may be of interest to some investors. The minutes could offer some more insight into how policymakers are feeling regarding monetary policy conditions, having previously maintained a cautiously optimistic outlook.
Inflation data ahead
Last week, the Pound extended five-month lows versus the Canadian Dollar. It was a very quiet week for Canadian data, leaving the Loonie to fluctuate on other events elsewhere. In the week ahead, Canadian data will include inflation readings which could be highly influential for the CAD exchange rate. Other stats out will include the moderately influential housing and retail numbers.