The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
This left Sterling to trade on external stimuli, with the situation in Ukraine resulting in investors largely avoiding the pound amidst weak risk appetite.
The end of the week then saw the pound trade with some modest gains in the wake of the UK’s latest GDP figures.
Data published by the Office for National Statistics (ONS) showed the UK economy grew by 0.8% in January, smashing forecasts for a modest 0.2% expansion and bolstering hopes for strong first quarter growth.
Turning to this week’s session, the focus for GBP investors will undoubtedly be on the Bank of England’s (BoE) latest interest rate decision.
The BoE is widely expected to deliver a third consecutive rate hike this month, in a move which has been largely priced in by GBP investors.
Instead the focus will be on the BoE’s forward guidance. Should the bank signal plans to maintain the current pace of monetary tightening then Sterling is likely to strengthen. On the other hand a more cautious outlook from the bank in light of the situation in Ukraine could remove a key pillar of support for the pound and send GBP exchange rates tumbling.
In the meantime, the publication of the UK’s latest jobs report could offer some direction to the pound in the first half of the week, with an expected drop in unemployment and uptick in wage growth in January potentially bolstering support for GBP exchange rates.
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)