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Expanding again

Expanding again

Last week, British data showed the UK economy had expanded by 0.4% in February, despite a lockdown, following a sharp -2.2% drop in January. While vaccine news is mainly positive in the UK at the moment, the emergence of new coronavirus variants could be a reason sentiment in the Pound ebbs as newspaper headlines report on the matter. In the week ahead, labour market stats will be released, with unemployment levels forecast to remain on hold at around 5.0%. Meanwhile, inflation, services, and manufacturing data will also be out with predictions to climb. Sterling sentiment has faltered recently, and the Pound could be sensitive to geopolitical developments and sentiment shifts elsewhere as the week progresses. 

ECB monetary policy ahead 

Last week, the Euro reached its highest level versus the Pound since 26th February as Sterling softened and EU optimism rose. The covid vaccine rollout has been slow across the Eurozone but now appears to be picking up pace. Unfortunately, the Eurozone economic recovery is still lagging behind, impacted by being slow off the mark when it comes to vaccinations and the implementations of lockdowns to curb waves of rising cases. In the week ahead, the European Central Bank will announce its latest monetary policy decisions, while data detailing the productivity of the Eurozone's manufacturing and services sectors will also be released.

Stimulus bolsters spending 

The Pound touched its lowest level since 5th February against the US Dollar last Monday, before climbing by around 1.0% throughout the week. US President Joe Biden's stimulus package helped bolster consumer spending, and unemployment claims have also declined as the economy recovers and reopens. Vaccinations are climbing rapidly, but so are Covid case numbers. The hope is with so many vaccinations being administered, the rate of hospitalisation will stay low. In the week ahead, US manufacturing and services data will be released, as well as weekly unemployment claims stats. 

Central banks in focus 

The Pound hit its lowest levels since late February against the Aussie and early March versus the Kiwi on Friday last week as the British currency softened. Last week, the Reserve Bank of New Zealand opted to keep interest rates on hold in an expected move. It wasn't a particularly eventful meeting, but the central bank acknowledged that the global growth outlook had improved and that New Zealand commodity and export prices were enjoying stronger demand which was reflected by their prices. Meanwhile, in Australia, one of the quickest nations to return to pre-pandemic employment, the labour market continued to show signs of recovery. The number of hours worked, and the level of employment in March 2021 was higher than the 2020 number, with unemployment falling to 5.6%. 

In the week ahead, the Reserve Bank of Australia meeting minutes will be released, which will give insight into the central bank's latest thoughts on the matter of monetary policy and the economy. Additionally, data detailing the latest Australian retail, manufacturing, and service sector stats will be released. Meanwhile, New Zealand inflation figures will be released. While the annual figure is expected to remain at 1.4% in Q1, the quarter alone is forecast to show an increase of 0.7%, up from the previous 0.5%. 

Interest rate decision ahead 

It was an incredibly quiet week for Canadian data last week, with only the Business Outlook Survey worth noting, which registered an increase to 2.9 in Q1. In the week ahead, there are a few interesting events that could capture the interest of Canadian Dollar investors. Inflation rate data will be released, with an upswing from 1.1% to 2.3% on the year in March forecast. Meanwhile, the Bank of Canada will also make its latest interest rate decision, with expectations to remain on hold at 0.25%. The central bank's monetary policy report will also be released.