Key Points
GBP continues to strengthen, as improvement in risk appetite.
UK GDP set to increase further and stay away from a recession.
Busy week for US, Inflation, meeting minutes and retail sales expected.
FX Report
GBP
The pound gained ground for a 4th straight week last week, continuing to benefit from the broad improvement in risk appetite, and continued softness in the USD, extending its recent winning run to the best stretch since January
That said, and despite making a closing break of recent stiff resistance at 1.2445, a move above the 1.25 handle was an ask too much for cable, with sellers defending this level rather well as the holiday-shortened week drew to a close
Looking ahead, a quiet week awaits in terms of UK economic events, though Thursday’s monthly GDP print may attract some attention, as the UK economy continues to outperform consensus expectations
EUR
The common currency also advanced last week, extending its recent bull run into a 6th straight week, the best run since late-2022 for the EUR, which once again continues to benefit from the broad-based USD weakness dominating the G10 FX space
As with the GBP, however, the EUR was unable to make a break above the psychologically important 1.10 handle, perhaps giving the bears some hope; though, EUR/USD did, last week, notch its highest close since early-February
This week, the economic calendar is relatively quiet in the eurozone, hence external developments are set to remain the primary driver of the currency, though remarks from a plethora of ECB speakers will be closely watched, as the market attempts to second-guess the magnitude of the likely May hike
USD
The buck again faced headwinds last week, with the DXY notching its 5th weekly decline in 6, and falling to its weakest levels since early-February, as increased expectations for a ‘soft landing’ continue to dent the attraction of the greenback
This is despite another goldilocks payrolls report on Friday, with 236k jobs being added to the US economy in March, while unemployment declined to 3.5%, a report that again proves the remarkable resilience of the jobs market despite ongoing Fed tightening
The week ahead is a busy one on the US economic calendar, highlighted by Wednesday’s CPI print, set to show a re-acceleration in core prices, while minutes from the March FOMC meeting, as well as the latest retail sales, industrial production, and consumer sentiment figures will also all be eyed
World News
The IMF have announced that ultra-low interest rates are set to return to pre-covid levels, following examination of ageing populations and low productivity levels. They stated that “recent increases in real interest rates are likely to be temporary”, when inflation is back to its targeted level of 2%, economies and central bank should ease monetary policy and lower interest rates to pre-pandemic levels.
Junior doctors have launched their 4-day strike campaign, with as many as 350,000 appointments and operations at risk of being cancelled this week. The committee is calling for a pay increase of 35%, meaning some doctors would be receiving a £20,000 pay rise. As junior doctors make up around 50% of the NHS’ workforce, this will be the biggest disruption in history and will bring “immense pressure on services”.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Wednesday 12th April | US | CPI y/y | 6.60% | 5.20% |
| Wednesday 12th April | CA | Interest Rate Decision | 4.50% | 4.5 |
| Wednesday 12th April | US | FOMC Meeting Minutes | ||
| Thursday 13th April | UK | GDP m/m | 0.30% | 0.10% |
| Friday 14th April | US | Retail Sales m/m | -0.40% | -0.40% |
Indices
| Share Index | Prev. Close | Open |
| FTSE100 | 7741.56 | 7741.56 |
| DAX | 15597.89 | 15710.45 |
| CAC40 | 7324.75 | 7381.77 |