BoE meeting ahead
BoE meeting ahead
The Pound reached 11-day lows versus the US Dollar on Friday at interbank levels of 1.3803, while the Sterling to Euro exchange rate was very flat throughout the week, closing just 0.24% higher than where it opened. In the week ahead, the Bank of England will meet to discuss monetary policy. Some analysts suggest the central bank may look to announce the future tapering of its quantitative easing programme. Britain appears to be making its way out of the pandemic, and the economic impact of Covid has been lessening, which means policymaker decisions will be under the microscope. Markets are keen to see what will happen to central bank policy under Andrew Bailey, who took over from Mark Carney during the pandemic, and whether future rate hikes will take place alongside a reduction of Bank-held government bonds. Some institutions forecast an upswing in the Bank's growth forecasts for 2021, given the UK's coronavirus cases and fatalities are at their lowest levels since September, and Boris Jonson's roadmap looks to be on schedule for more areas of the economy to reopen in May. Additionally this week, services and construction data will print.
Looking to travel
The Eurozone has struggled this year, given its lagged so far behind other nations in its vaccine rollouts and had to implement covid restrictions, meaning it experienced a double-dip recession from January to March. As vaccination rates increase, the economic outlook appears to be improving, and EU leaders believe overseas travel could be possible by the summer, with member states expected to accept vaccinated travellers. In the week ahead, manufacturing and services stats will be out for some of the largest economies, Germany, France, and Italy. Additionally, the European Commission will release its EU economic forecasts, and the European Central Bank will publish its Economic Bulletin on Thursday. ECB President Christine Lagarde will speak on Friday.
US growth showed a healthy rebound in Q1, registering a 6.4% expansion, supported by a 14-month high in consumer spending. President Joe Biden has suggested the coronavirus vaccination programme has been influential in this upswing, with around 30% of the total population fully vaccinated. Meanwhile at the Federal Reserve, Chief Jerome Powell has stated that the economic recovery has been uneven and hopes that more jobs will close gaps in demographics and states. In the week ahead, manufacturing stats will be released, as well as the highly influential Non-Farm Payrolls data. Additionally, Fed policymakers will speak throughout the week.
AUD and NZD
RBA on hold
The Pound fell sharply against the Aussie Dollar on Monday as some non-oil commodity currencies rallied. Sterling recovered quickly and closed the week almost 0.7% higher than the week's low. Meanwhile, the Pound stumbled against the New Zealand Dollar to reach its lowest level since 3rd March on Thursday.
Overnight, the Reserve Bank of Australia announced it would keep its cash rate the same and suggested that it didn't think conditions would warrant an increase in lending rates until 2024. However, the central bank revised GDP growth higher for 2021 to 4.75% and suggested a slower pace next year of 3.5%. Additionally, it expects unemployment to close the year at around 5.0% and 4.5% next year. Despite these forecasts, RBA policymakers have left the door open for additional easing if needed, potentially encouraged by the recent weak inflation number for Q1.
Meanwhile, the Kiwi Dollar gained around 5.0% in March versus the US Dollar. Tonight, highly influential New Zealand labour market data will be released detailing employment and unemployment levels. Later in the week, New Zealand retail spending and building stats will be published. In Australia, services, building, and retail numbers will be released. A speech from RBA representative Guy Debelle will also take place.
BoC strengthens CAD
The Pound drifted lower against the Canadian Dollar last week, closing around 2.0% softer than where it opened. The Canadian Dollar has been stronger following the Bank of Canada meeting, which saw policymakers take a more hawkish stance. This week, highly influential labour market data will be released, which could influence the Canadian Dollar. Meanwhile, Bank of Canada Governor Tiff Macklem will also speak this week.