• Audere Research

Weekly FX Outlook April 26th


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GB Pound

Sterling was weak against the Euro.


Movements

GBPUSD opened at 1.3884 and after briefly touching the 1.40 level on Tuesday it gradually started to depreciate, reaching a low of 1.3820 on Thursday. It then recovered some ground on Friday to close with a little gain of 0.31% at 1.3927.


GBPEUR opened at 1.1543 and traded higher on Monday to reach 1.1640. It then started to fall, touching a new 2-month low on Friday (1.1465) and closing at 1.1510 (-0.29%).


Movement rationale

The Sterling traded higher as the new week commenced, pushed once more by optimism surrounding the reopening of the UK’s economy after months in lockdown. However, the currency appreciation was short-lived as a deterioration in risk sentiment, associated with surging global Covid-19 cases in Asia, contributed to a decline of the Pound versus major rivals in the mid-week sessions. Despite better-than-expected UK Retail Sales data (5.4% vs 1.5%) and PMIs on Friday, the British Pound failed to rebound, likely due to current tensions in Ireland which might undermine recent Brexit progress. UK unemployment rate fell further and came in at 4.9% slightly better than expected. In more positive Covid news, the UK hit a key milestone of providing to half its population the first dose of a vaccine.


Week ahead

A light UK economic calendar includes the following:


Calendar

Thursday 7am | Nationwide Housing Prices (Apr)


US Dollar


The US Dollar remains under pressure.


Movements

EURUSD began the week at 1.2028 and traded sideways for most of the time before moving higher on Friday and regaining the 1.2100 level (2-month high) this morning where it closed with a rise of 0.62%.


GBPUSD opened at 1.3884 and after briefly touching the 1.40 level on Tuesday it gradually started to depreciate, reaching a low of 1.3820 on Thursday. It then recovered some ground on Friday to close with a little gain of 0.31% at 1.3927.


Movement rationale

The Dollar started the week with the same soft tone as the previous one, extending losses for a sixth day on Monday amid optimism about the pace of vaccine rollout in Europe and U.S. yields remaining below their March spikes. Some relief for the Greenback emerged in the middle of the week as safe haven demand resurfaced, triggered by a resurgence of COVID-19 cases in India and Japan The USD correction ended on Thursday as investors negatively reacted to news indicating that US President Joe Biden is planning a significant hike in capital gains tax. Also, despite some good US economic data, with strong Markit PMIs and robust new home sales, the Dollar declined on Friday as risk appetite returned to the markets.


Week ahead

A heavy economic data calendar will be centred toward the US Federal Reserve, which meets on Wednesday:


Calendar

Monday 1:30pm | Durable Goods Orders (Mar)

Tuesday 3pm | Consumer Confidence (Apr)

Wednesday 7pm | Fed Interest Rate Decision

Thursday 1:30pm | Gross Domestic Product Annualized (Q1), Initial Jobless Claims (Apr 23)

Friday 3pm | Michigan Consumer Sentiment Index (Apr)


Euro


The Euro has a strong week.


Movements

EURUSD began the week at 1.2028 and traded sideways for most of the time before moving higher on Friday and reaching this morning the 1.21 level (2-month high). It closed with a gain of 0.62% at 1.2100.


GBPEUR opened at 1.1543 and traded higher on Monday to reach 1.1640. It then started to fall, touching a new 2-month low on Friday (1.1465) and closing at 1.1510 (-0.29%).


Movement rationale

It has been a good week for the Euro, as the region's accelerating vaccination rate is allowing investors to turn more positive toward the single currency. Also, according to a statement released by the World Health Organization on Tuesday, coronaviruses cases are rising in all regions except Europe, boosting the currency’s demand. On Friday, the Euro posted its biggest daily gains versus rival currencies since early February after upbeat data on European services and manufacturing activity highlighted once more that the Eurozone recovery is gaining momentum.


Week ahead

The Eurozone economic data calendar includes the following:


Calendar

Monday 9am | IFO – Business Climate (Apr)

Thursday 10am | Consumer Confidence (Apr)

Friday 10am | Consumer Price Index (Apr), Gross Domestic Product (Q1), Unemployment Rate (Mar)


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