Sterling starting to wane | US dollar affected

ResearchWelcome to the Weekly Market Analysis – our digestible currency market update which gives you an expert insight into key movements, and what to expect in the coming week.

Sterling starting to wane

Last week saw the sterling to euro exchange rate rise consistently, but now the pound has started to wane after the Bank of England (BoE) hinted it would not move to a more hawkish outlook prior to the EU referendum.

Ahead of the weekend, the GBP/EUR rate weakened as the BoE left interest rates on hold at 0.5% – a record low. With the release of stronger Chinese data on Friday, safe haven demand depressed and the GBP/EUR pairing regained a little strength during the day.

There is also the opportunity for some movement on sterling when governor of the Bank of England, Mark Carney, gives a testimony to the House of Lords on Tuesday.

US dollar affected by political uncertainty

It has been a mixed week in the USD/GBP pairing, as political uncertainty on both sides of the Atlantic had an effect. In the US, it was the party leader vote and of course it is the EU referendum that is weighing heavily on performance in the UK.

Some losses were clawed back by the sterling on Friday after data from the US showed that consumer confidence had cooled in an unexpected manner. There may be few notable gains in the dollar this week as political uncertainty continues to affect US exchange rates.

Uncertainty in Greece worries the euro

Uncertainty in Greece is the biggest worry for the euro, stopping it from achieving the bullish run that might have been capable otherwise as a result of an unexpected uptick in eurozone inflation.

Rallying in the global equity markets meant the euro took a step back last week, which is thought not to be related to the upcoming April policy meeting of the European Central Bank (ECB).

Investors should wait for president of the ECB, Mario Draghi, to make his latest press conference to infer anything on what the central bank will do next.

Canadian dollar under pressure

Since oil talks in Doha did not manage to reach an agreement on freezing production over the weekend, the Canadian dollar has been unable to make gains against the Greenback. The currency is likely to remain under pressure for the rest of the week, after no deal was made between OPEC and non-OPEC countries.

Enjoy your week.


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