Open for business
Open for business
Sterling marked a second week of gains on a trade-weighted basis last week, residing close to 2021 highs. Positivity over further easing of lockdown measures that enable much more freedom in the hospitality sector has boosted the Pound. Last week, GBP/USD closed 0.84% higher against the US Dollar after reaching interbank levels of 1.4166, the highest level since 26th February, and has been trading above the 1.41 level today. Against the Euro, the Pound reached five-week highs at 1.1681, closing 0.95% higher. In the week ahead, labour market data will be released, which could be influential for the Pound. Additionally, inflation stats will print with forecasts to double in April from March's readings. The week will end with prints from Britain's manufacturing and services sectors. The Pound seems to be remaining resilient against recent concerns over the Indian Covid variant and the possibility of greater transmissibility, but investors will be keeping a close eye on the headlines.
The Euro experienced losses before recovering later in the week, ending Friday's trading relatively flat. However, versus the US Dollar, the Euro was able to climb back above the 1.21 level while closing around the 0.86 figure versus the Pound. Recently revised inflation forecasts and a strengthening vaccination effort have increased Euro popularity. However, broader market sentiment is also playing into the Euro's value, meaning significant events elsewhere—such as concerns over the recent US inflation figure, which jumped higher than forecast—could be something that impacts wider markets. Meanwhile, Eurozone inflation data will be out this week, with expectations for consumer prices to climb, and is a topic which could be brought up when European Central Bank President Christine Lagarde speaks on Thursday. Additionally, growth data will be out, as well as manufacturing and services stats.
Waiting on the minutes
The US inflation stat posted a surprisingly high figure last week which initially bolstered the US Dollar. However, the Federal Reserve has stated that a single rise in inflation wouldn't be enough to ease its monetary policy stance and that it would await further consumer price readings, as well as important labour market figures—something that weighed on the Buck after the initial inflation reaction. Markets will be keen to see the Fed's meeting minutes released this week, which should provide greater clarity on policymaker thoughts regarding the nation's economic recovery. Additionally, manufacturing and services stats will be released this week.
AUD and NZD
Commodity price climb pauses
Last week, the Pound to Australian Dollar exchange rate reached six-week highs, closing around 1.85% stronger. Meanwhile, the Pound to New Zealand Dollar exchange rate touched ten-week lows before recovering enough to close 1.32% higher. The dip in GBP/NZD came as the Kiwi Dollar strengthened along with commodity prices, but as that rally took a pause, the Pound had more opportunity to reclaim losses.
In the week ahead, the Reserve Bank of Australia's meeting minutes will be released, which could be interesting for investors looking for further clues regarding the central bank's stance on monetary policy moving forwards, but is unlikely to give too much new information. The RBA recently revised growth forecasts higher and unemployment rates lower. Additionally, out this week will be high-tier Australian consumer confidence stats, as well as influential labour market data. Australian manufacturing and services data will be out at the end of the week. It's a quiet week for Kiwi ecostats, with only a few low-tier numbers due for release.
The Pound to Canadian Dollar exchange rate spent last week in a relatively tight range but registered a 0.55% climb by the end of the week. One of the most important events for Canadian Dollar buyers in the week ahead will be the country's inflation stats on Wednesday. Additionally, new house data and retail spending figures will also be out this week.