Market Update 18th April – 22nd April

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

GBP

The pound reached a two-week high on Wednesday 5th, partly boosted by a high inflation reading the previous day; showing UK consumer price inflation jumped to its highest point in thirty years. Upbeat unemployment data barely registered on the UK currency’s radar amid the squeeze on living standards and a diminished workforce. UK unemployment fell to its pre-pandemic level at the start of 2022, but the cost-of-living crisis deepened as earnings failed to keep pace with pay despite the record number of vacancies. We have a speech from the Bank of England’s Governor on Friday, this speech could cause massive volatility with the pound and we could see big swings either way. There are raising expectations that the Banks of England will continue raising interest rates at its next meeting in May to tackle inflation. If interest rates are raised, then we could see the pound strengthen even further.  

EUR

Last week Euro weakness continued, with the Pound to Euro exchange rate rising back to pre-referendum highs. In the run-up to last week’s bank holiday extended weekend in the UK, economic figures showed that unemployment fell back to pre a pandemic low. This suggests a healthy British economy, which has supported the Pound strength against the Euro. The Euro also came under pressure from the US Dollar last week, as the continuing conflict in Ukraine has kept the dollar strong, maintaining its status as a ‘safe-haven currency’. Across the board the average value of the Euro has hit a two-year low. The likely primary cause of this is the European Central Bank’s April monetary policy decision, revealing a tough stance on measures taken to tackle inflation. We await European manufacturing and services data released on Thursday this week, which will give us an indication of the economic health on the continent.

USD

Since the start of April, we have continued to see the Dollar strengthen against the Pound and Euro, primarily due to the suggestions that the Federal Reserve are considering a rate hike sooner rather than later to combat decade high inflation. Additionally, the USD has seen continued strength due to its status as a safe-haven currency amid times of crisis, and unfortunately the War in Ukraine continues with no clear sign of a ceasefire. On Thursday this week, there will be a speech from the Federal Reserve’s chair Jerome Powell. This is likely to shed some light on exactly when the Fed will hike interest rates, which will therefore impact movements in USD exchange rates. Additionally, the International Monetary Fund’s member countries meet on Friday morning. We will be paying close attention to this as the information that surfaces could impact exchange rates, particularly the USD.