Following last week's sharp selloff on the announcement of a US-Iran ceasefire, the US dollar looks poised to rebound this week, following the breakdown of peace talks over the weekend.
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 1.9% on the week
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EUR/USD – Up 1.7% on the week
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AUD/USD – Up 2.6% on the week
Pound (GBP)
In addition to the UK’s latest GDP figures, the pound (GBP) will also be guided by remarks from Bank of England (BoE) Governor Andrew Bailey this week. If Bailey reiterates that markets are acting a little overzealous in pricing in future interest rate hikes, Sterling is likely to soften.
Euro (EUR)
In the spotlight for EUR investors this week will be the accounts from the European Central Bank (ECB) March policy meeting. Markets will be looking for more insight into how the war in the Middle East may shape monetary policy, with the euro (EUR) poised to strengthen if they indicate that policymakers are leaning towards hiking rates again.
US dollar (USD)
Movement in the US dollar (USD) will likely remain closely tied to the situation in the Middle East this week. If tensions in the region continue to flare following the breakdown of peace talks over the weekend, markets are likely to favour safe-haven assets.
Australian dollar (AUD)
Australia's latest labour report will be in the spotlight this week, with the Australian dollar (AUD) likely to strengthen if robust jobs data underpins bets for further monetary tightening from the Reserve Bank of Australia (RBA).
South African rand (ZAR)
The South African rand (ZAR) faces likely headwinds this week, with the emerging market currency being pressured by fresh geopolitical uncertainty and the rise in oil prices following US President Donald Trump’s threat to blockade Iranian shipping through the Strait of Hormuz.
Canadian dollar (CAD)
In the absence of any notable domestic data, movement in the Canadian dollar (CAD) is likely to be tied to oil-price dynamics this week, likely leading the ‘loonie’ to strengthen if prices continue to rally.
New Zealand dollar (NZD)
As domestic data is in short supply, movement in the New Zealand dollar (NZD) will likely be driven by wider market trends this week, with renewed tensions in the Middle East likely to sap NZD demand.
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