Strong UK GDP failed to boost the pound last week, as comments in the wake of the Bank of England’s (BoE) interest rate decision fuelled bets on a June rate cut.
This week, softer UK jobs data could see the pound fall even further. Meanwhile, signs of sticky US inflation could boost the US dollar.
Pound
The pound fell last week as Bank of England Governor Andrew Bailey signalled a faster pace of policy loosening following the bank’s interest rate decision. Stronger-than-expected UK GDP failed to provide the pound with a meaningful boost at the end of the week.
Sterling could face further losses this week off the back of the UK’s latest labour market report. If we see a rise in unemployment and a slowdown in wage growth in March, bets on a BoE rate cut in June could see the pound slump.
Euro
The euro fluctuated through last week’s session amid mixed Eurozone data. While stronger retail sales and service sector growth in the bloc boosted EUR, downbeat industrial data from Germany offset the upside. However, the euro managed to gain against its weaker rivals.
Looking forward, Germany’s latest ZEW economic sentiment index could boost the euro this week. Analysts expect morale in the Eurozone’s largest economy to have risen again this month, potentially buoying EUR exchange rates.
US dollar
A risk-off market mood supported the safe-haven US dollar through the first half of last week’s session. However, a sharp increase in American jobless claims saw the ‘greenback’ relinquish its gains towards the end of the week.
The focus for the week ahead is the latest US consumer price index. Signs that American inflation remains sticky could boost USD by dampening Federal Reserve rate cut bets.
Australian dollar
The Australian dollar struggled last week as the Reserve Bank of Australia (RBA) left interest rates untouched at its policy meeting and signalled that rates may have peaked.
Australia’s latest jobs data this week could fuel bets that the RBA may start considering interest rate cuts, if unemployment ticks higher as expected, this could put pressure on the ‘Aussie’.
