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Surviving a downturn

Historic lows 

Last week, the Pound took a bit of a dive on Thursday after the Bank of England monetary policy announcement. Interest rates were left at historic lows of 0.1%, and quantitative easing remained unchanged. However, the central bank acknowledged that inflation could rise to above 3.0% by the end of 2021, which could trigger a shift from dovish to hawkish in policymaker attitudes. In the week ahead, Bank of England Governor Andrew Bailey will be speaking, and any comments surrounding inflation or monetary policy strategy could influence the way GBP trades. 

Words of encouragement 

The Pound to Euro exchange rate climbed by around 0.8% last week before wiping out most of its gains by Friday afternoon. A European Central Bank representative spoke positively about the EU economic recovery last week, suggesting that growth for this year and next could be stronger than current forecasts, and the bank should also remove its supportive monetary policy gradually. In the week ahead, ECB President Christine Lagarde will speak in a discussion titled 'What have we learnt in 2020?'. In terms of economic data, German inflation and unemployment stats will be released. 

Surviving a downturn  

The Pound managed to climb by around 1.5% in the first half of last week, before tapering off at about 0.8%. In US politics, Joe Biden managed to push his $1.2tn infrastructure deal through Congress successfully. Additionally, stress tests on major US banks showed they were healthy enough to survive a financial downturn akin to the 2008 Global Financial Crisis. The main event will be the US Non-Farm Payrolls figure and unemployment stat out on Friday in the week ahead. Consumer Confidence and manufacturing numbers will also be released throughout the week and could influence the way the US Dollar trades. 

Commodity currencies rise 

The Pound had a solid start to the week against the New Zealand and Australian Dollars before falling later on. The GBP/NZD currency pair tumbled by as much as 1.79% from its peak. Meanwhile, the GBP/AUD currency pair slipped 1.4% from its high. While Sterling softened on account of the BoE interest rate decision, commodities also rallied, supporting commodity currencies such as the AUD and NZD, contributing to the moves later in the week. 

In the week ahead, Reserve Bank of Australia Governor Philip Lowe will be speaking, which could influence the Aussie Dollar. Additionally, manufacturing, building, trade, and loan stats will also be released and could create some moderate market movement. Meanwhile, in New Zealand, business and consumer confidence readings will make their way onto the market alongside building data, which could contribute towards NZD fluctuations. 

Growth readings ahead 

From Monday morning to Friday afternoon, the GBP/CAD currency pair fell by just over 1.0%. Commodity currencies such as the Canadian Dollar were bolstered by an increase in commodity prices towards the end of the week. Data that could impact the Loonie in the week ahead includes growth stats on Wednesday, as well as trade, building, and manufacturing stats on Friday.