Market Update 25th April – 30th April

Where you will be able to keep up to date with all the latest changes in the currency market

GBP

Over the course of last week the Pound steadily decrease in value against both the Euro and the U.S. Dollar. The International Monetary Fund revealed a pessimistic view of the British economy during a meeting of the organisation on Tuesday. They have predicted that the UK’s economy will experience slower economic growth and more aggressive inflation than the world’s other major economies over the course of the next year. This, coupled with the Bank of England’s recent softened stance in terms of interest rate policy action, has likely contributed to the weakening pound with the downshift in rate hike expectations having an inevitable mechanical downward pull on Pound exchange rates. Additionally, there have been indications from the Federal Reserve that US interest rates are likely to be hiked in the next two months; further strengthening the dollar against the pound. 

EUR

We have seen Pound’s recent period of gains against the Euro overturned, with the rate steadily declining over the last week. This has been a response to signs of a looming significant slowdown in British economic activity. At the start of this week we saw Macron retain the presidency in France for a further 5 years. Some analysts believe that Macron will provide stability in Europe compared to his far-right competitor Marie Le Pen, supporting the Eurozone’s single currency. On Thursday this week the German consumer price index data is released, giving us an indication of the level of inflation in Europe’s most populated country. This data could have implications on Euro exchange rates, depending on the European Central Bank’s stance on the data released. Additionally, on Friday the Eurozone’s Gross Domestic Product data is released, which will give us an indication of the health in European economies and will influence currency markets accordingly.

USD

We have seen continued U.S Dollar strength throughout last week and the start of this week, with it currently the strongest it has been against the Pound since November 2020. The main reason for this is due to the ongoing war which has intensified in Ukraine. Sporting sanctions have now been implicated against Russia, suggesting that sanctions are going to continue and that there is no clear end to the war in sight. Considered the worlds ‘save-haven currency’; we are therefore likely to see the USD continue to strengthen. Analysts have suggested that the Federal Reserve are going to raise interest rates in within the next two months, which is expected to strengthen the USD even further. On Thursday, Growth Domestic Product data for the USA will be released. This will give us an indication of the health of the American economy. Depending on the data, we could see the dollar take a big swing either way.