Investors are bracing for another volatile week in the currency market, with ongoing uncertainty in the Middle East, several high-impact economic releases, and the potential for political upheaval in the UK all set to influence trade.
Last week's key rate movements
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GBP/EUR – Unchanged on the week
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GBP/USD – Up 0.4% on the week
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EUR/USD – Up 0.5% on the week
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AUD/USD – Up 0.6% on the week
Pound (GBP)
Doubts over the future of Keir Starmer’s premiership pose a key risk to the pound (GBP) at the start of this week and may ultimately overshadow the release of the UK’s latest GDP figures, even if they report a strong acceleration of growth in the first quarter.
Euro (EUR)
Germany will publish its latest ZEW economic sentiment index this week. Analysts expect morale in the Eurozone’s largest economy to have continued to deteriorate this month, potentially placing pressure on the euro (EUR) in the first half of the week.
US dollar (USD)
While events in the Middle East may continue to act as the primary catalyst for the US dollar (USD) this week, the currency will also be influenced by the latest US consumer price index, with an acceleration of inflation potentially helping to underpin USD in the first half of the session.
Australian dollar (AUD)
The Australian dollar (AUD) may face headwinds this week if Australia’s latest consumer and business confidence indexes report that morale continues to deteriorate.
South African rand (ZAR)
The release of South Africa’s latest unemployment data may drag on the South African rand (ZAR) this week, amid forecasts that the local jobless rate rose in the first quarter of the year.
Canadian dollar (CAD)
In the absence of any notable domestic data, movement in the commodity-linked Canadian dollar (CAD) may be driven primarily by oil price dynamics this week, potentially underpinning the ‘loonie’ if Middle East uncertainty continues to buoy crude.
New Zealand dollar (NZD)
Impactful New Zealand economic data is also in short supply this week, with the New Zealand dollar (NZD) likely to be driven by wider market trends.
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