The pound was carried to multi-month highs last week amid reports that incoming Prime Minister Andy Burnham was set to appoint Shabana Mahmood as his Chancellor of the Exchequer. However, Burnham appeared to push back on this in a speech late last week, leaving some room for volatility when his cabinet is announced on Monday.
Last week's key rate movements
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GBP/EUR – Up 0.2% on the week
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GBP/USD – Up 0.4% on the week
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EUR/USD – Up 0.2% on the week
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AUD/USD – Up 0.4% on the week
Pound (GBP)
A glut of UK economic indicators as well as the appointment of incoming Prime Minister Andy Burnham's cabinet will likely inject a degree of volatility into the pound (GBP) this week, with GBP investors particularly focused on the market's reaction to Burnham's pick for Chancellor.
Euro (EUR)
The European Central Bank's (ECB) latest interest rate decision will act as the primary catalyst of movement for the euro (EUR) this week. No policy changes are expected this month, but the euro may still strengthen if the bank hints that more tightening may be required later in the year.
US dollar (USD)
In the absence of any major US economic releases this week, movement in the US dollar (USD) may be tied to geopolitical developments, with the continued escalation of tensions in the Middle East likely to bolster demand for the safe-haven currency.
Australian dollar (AUD)
AUD investors will look to Australia's latest employment data for direction this week. If the jobs report points to a cooling of employment growth, it's likely to weaken the case for further interest rate hikes from the Reserve Bank of Australia (RBA) and drag on the Australian dollar (AUD).
South African rand (ZAR)
The South African Reserve Bank (SARB) is forecast to announce an interest rate hike when it concludes its latest policy meeting later this week, the expectations for which could help to temper losses in the South African rand (ZAR) resulting from ongoing tensions in the Gulf.
Canadian dollar (CAD)
Surging oil prices are likely to underpin the Canadian dollar (CAD) this week, although these gains could be tested at the start of the session if a cooling of domestic inflation further softens expectations for any monetary tightening from the Bank of Canada (BoC) in the coming months.
New Zealand dollar (NZD)
The New Zealand dollar (NZD) may be bolstered by the publication of the latest domestic quarterly CPI print this week as an expected acceleration of inflation is likely to reinforce Reserve Bank of New Zealand (RBNZ) rate hike bets.
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