The US dollar suffered a sharp selloff on Friday in the wake of an extremely disappointing payroll print.
Sterling appears to be consolidating these gains so far this morning, with GBP/EUR steady at €1.1553 and GBP/USD flat at $1.3743. GBP/CAD is rangebound at C$1.7288, while GBP/AUD and GBP/NZD are buoyed at AU$1.8068 and NZ$1.9590, respectively.
Looking ahead, the release of the latest US CPI figures could send the US dollar higher today if inflation surged last month as expected.
What’s been happening?The pound enjoyed a solid start this week, rallying against the majority of its peers as the reopening of a large part of the UK economy cheered GBP investors.
Sterling sentiment was bolstered by hopes that the reopening of non-essential retail, hairdressers and outdoor pubs, coupled with pent up demand, will drive a strong economic recovery in 2021 and offset concerns that talks between the UK and EU over the Northern Ireland Protocol remain deadlocked.
At the same time, the euro held its ground through yesterday’s trading session as a stronger-than-expected Eurozone retail sales release helped to limit any losses due to ongoing concerns over Europe’s coronavirus resurgence.
The US dollar, meanwhile, traded in a wide range on Monday, initially being buoyed by a sense of caution, before relinquishing these gains as a rebound in equity markets and subdued Treasury yields dampened USD demand.
What’s coming up?Top of the agenda today will be the publication of the US consumer price index.
Economists are forecasting that March’s figures will show a sharp acceleration of inflation, which may cause the US dollar to appreciate this afternoon if it prompts investors to reassess their expectations for the next rate hike from the Federal Reserve.
In the meantime, the publication of the UK’s latest monthly GDP figures look to offer support to the pound today, after data earlier this morning confirmed that the UK economy expanded in February in spite of the lockdown measures that were in place at the time.
For EUR investors the focus this morning will be on the latest ZEW surveys. Will another improvement in German economic sentiment help to bolster the appeal of the euro?
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)