• Audere Research

Weekly FX Outlook April 19th


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GB Pound

Sterling recovered some lost ground versus the Dollar.


Movements

GBPUSD opened at 1.3719 and traded sideways for most of the week. It then started to appreciate sharply on Friday to close with a gain of 1.2% at 1.3884.


GBPEUR opened at 1.1545 and moved in a wide range during the week, briefly slipping to its lowest level in almost 2 months on Friday when it reached 1.1475. The pair finally recovered and closed unchanged at 1.1543.


Movement rationale

After a turbulent previous week, Sterling regained its composure, even though the currency remained under pressure. Some analysts are partly attributing this recent weakness to the rising political anxieties regarding the Scottish elections due in May. Some positive economic data were released on Tuesday, showing strong manufacturing figures and January’s GDP figures being revised higher which provided some support.

The currency made further traction on Friday when the market re-focused once again on the economic outlook. The partial re-opening of the UK economy gave the Sterling a helping hand, supported by the latest set of positive vaccination data.

Week ahead

The UK economic calendar includes the following:


Calendar

Tuesday 7am | ILO Unemployment Rate (Feb)

Wednesday 7am | Consumer Price Index (Mar)

Friday 9:30am | Markit Services PMI(Apr), Retail Sales (Mar)


US Dollar


The US Dollar extended its previous week’s decline.


Movements

EURUSD began the week at 1.1883 and traded gradually higher, breaking the 1.20 level, reaching a 5-week high at 1.2028 this morning, to close with a strong gain of 1.2%.


GBPUSD opened at 1.3719 and traded sideways for most of the week. It then started to appreciate sharply on Friday to close with a gain of 1.2% at 1.3884.


Movement rationale

The Greenback continued to be sold heavily this month with the US Dollar Index dropping to 5-week lows. Despite positive inflation data released last Tuesday, with the US CPI rising 0.6% m/m, its largest rise since August 2012, the US Treasury yields fell significantly as the Fed said again that any spike in inflation is likely to be temporary. Further, market participants seem to have lost enthusiasm for the US reflation/vaccine trade and are focusing now on an improved growth outlook on the other side of the ocean. Some positive data, such as US retail sales, which rebounded 9.8% in March, and first-time claims for unemployment benefits falling last week to their lowest level since March 2020, did little to provide support to the currency.


Week ahead

A light US economic data calendar includes the following:


Calendar

Thursday 2:30pm | Initial Jobless Claims (Apr 16)

Friday 2:45pm | Markit PMI Composite (Apr)


Euro


The Euro was calm.


Movements

EURUSD began the week at 1.1883 and traded gradually higher, breaking the 1.20 level, reaching a 5-week high at 1.2028 this morning, to close with a strong gain of 1.2%.


GBPEUR opened at 1.1545 and moved in a wide range during the week, briefly slipping to its lowest level in almost 2 months on Friday, when it reached 1.1475. The pair finally recovered and closed unchanged at 1.1543.


Movement rationale

The single currency experienced a quiet week, with investors not paying much attention to a dovish speech by ECB President Christine Lagarde, which reiterated that the central bank support was needed well into the Euro-zone recovery. Move over, economic data released during the week was of little help to the currency, with Industrial production figures revealing that factory output tumbled more than expected in February, suggesting that the recovery was far from gaining traction. The main driver of Euro support remains the improved EU vaccination programme, with the jab rates accelerated notably in April as supplies have increased.


Week ahead

The Eurozone economic data calendar includes the following, with the biggest focus for the Euro being the ECB April policy decision, set for Thursday:


Calendar

Thursday 12:45am | ECB Interest Rate Decision

Thursday 3pm | Consumer Confidence (Apr)

Friday 9am | Markit PMI Composite (Apr)


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