Rates on hold
Rate hike split
While it was a relatively flat week for Sterling, for the most part, the British currency experienced a rebound at the end of last week. This followed surprisingly hawkish comments from the Bank of England's Monetary Policy Committee on the topic of rate hikes coming to light. Policymakers caught the market off guard, with the policymaker split being around even for wanting to review the monetary stimulus measures in place—even more surprising given the state of recent UK data, which has printed below estimates in recent weeks. Unemployment stats will be in focus in the coming months, with some due for release this week, as the government's furlough scheme is set to end at the close of September with as many as 1.6 million still not back in their positions. This means labour market data could rise if not all furloughed workers retain their jobs. Inflation data will also be out this week, as well as house price stats and spending numbers.
Touching seven-week lows
The Pound closed 0.33% higher last week after touching seven-week lows versus the Euro on Tuesday. Last week, the European Central Bank announced the first signs of tapering from the stimulus programme needed for the pandemic. ECB President Christine Lagarde expects Eurozone growth will reach pre-pandemic levels by the end of 2021. In terms of EU data, growth stats came in above forecast for the third quarter, while the European Central Bank decided to keep interest rates on hold at 0.0%. Eurozone data is pretty light in the week ahead, with Industrial Production, Balance of Trade, and final Inflation Rate numbers the main events.
The Pound closed last week's trading around 0.12% higher versus the US Dollar, after recovering from a 0.92% drop from where it opened earlier in the week. The US Dollar index ended up 0.40% higher last week as sentiment shifted back to the safe-haven currency on economic recovery and Covid concerns. Some of the most influential data out in the sessions ahead will include US inflation numbers, retail stats, and confidence figures. Coming up, the Federal Reserve's September meeting will be coming into sharper focus after more hawkish comments regarding the tapering of the stimulus measures in place have been evident in recent weeks.
AUD and NZD
Rebounding from the lowest level since May
The Pound closed the week 0.43% higher against the New Zealand Dollar last week, after clipping the lowest level since May 2021, and 1.18% higher versus the Australian Dollar last week. The Reserve Bank of Australia kept interest rates at lows of 0.10% last week; the central bank has said it won't move to increase the official cash rate until inflation levels reach its target of 2-3%. Inflation levels have been hovering around 1.75% in recent data points. RBA Governor Philip Lowe said: 'The recovery of the Australian economy has, however, been interrupted by the Delta outbreak and the associated restrictions on activity.'
A few key data points are out in the week ahead, including Australian Consumer Confidence and Consumer Inflation Expectations stats. Additionally, highly influential labour market data is also scheduled for release. Meanwhile, in New Zealand, growth data figures will be released, with expectations for a reading of 16.4% in the second quarter on the year, an increase from the previous 2.4% stat.
Rates on hold
The Pound closed 1.19% higher on the week against the Canadian Dollar last week. Meanwhile, the Bank of Canada opted to keep interest rates on hold at 0.25%, in line with expectations. Canadian labour market data showed levels of unemployment sank lower than forecast, despite the number of people entering the workforce falling short of predictions. In the week ahead, Canadian inflation data will be the main event on the economic calendar for those interested in the Loonie.