Another data-heavy week, coupled with renewed tensions in the Middle East, may infuse fresh volatility into the currency market this week, with a particular focus on the European Central Bank’s (ECB) latest interest rate decision.
Last week's key rate movements
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GBP/EUR – Up 0.3% on the week
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GBP/USD – Down 0.9% on the week
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EUR/USD – Down 1.1% on the week
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AUD/USD – Down 2% on the week
Pound (GBP)
The UK will publish its latest GDP data at the end of this week, with the pound (GBP) poised to fall if April’s month-on-month figures report a contraction in growth as the crisis in the Middle East sapped demand.
Euro (EUR)
The spotlight this week will be on the European Central Bank’s (ECB) latest interest rate decision. The ECB is widely expected to deliver a 25bps rate hike, which is likely to strengthen the euro (EUR), particularly if it’s accompanied by some hawkish guidance.
US dollar (USD)
Also in focus this week will be the latest US consumer price index. USD investors will be watching closely to see how the rise in global energy prices has fed through to US consumers, with a continued acceleration of inflation likely to further buoy Federal Reserve rate hike bets and lift the US dollar (USD).
Australian dollar (AUD)
Australia’s latest business and consumer confidence indexes will act as a key catalyst for the Australian dollar (AUD) this week, with a further decline in morale likely to pile more pressure on the ‘Aussie’.
South African rand (ZAR)
The South African rand (ZAR) may face headwinds in the first half of this week as South Africa’s latest GDP figures are forecast to show domestic growth slowed in the first quarter of 2026.
Canadian dollar (CAD)
The Bank of Canada (BoC) will deliver its latest interest rate decision this week. No changes to monetary policy are expected this month, but the Canadian dollar (CAD) may still rise if the bank signals it is open to raising rates in the coming months.
New Zealand dollar (NZD)
The New Zealand dollar (NZD) is likely to be driven by market risk dynamics this week in the absence of any notable domestic economic indicators. A risk-off mood stemming from renewed tensions in the Middle East could weigh on NZD.
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