GB Pound
Sterling was highly reactive to risk sentiment.
Movements
GBPUSD opened at 1.3859 and depreciated during the first part of the week to reach 1.3676. It then partly recovered on Thursday and Friday to close with a loss limited to -0.53% at 1.3786.
GBPEUR opened at 1.1655 and traded with a negative bias during the first half of the week before moving to positive territory to close with a gain of 0.34% at 1.1695.
Movement rationale
Sterling started the week with a sell-off, with the currency recording a new 6-week low against the Dollar and a 2-week low against the Euro on Thursday, as market participants have turned more pessimistic about the global recovery, focusing on the increased risks associated with the third wave of COVID-19 infections. Also, concerns that a slowdown in vaccine supplies from both India and possibly Europe to the UK would jeopardise the country’s roadmap for exiting lockdown, played a role in the currency depreciation. GBP bounced back through the latter part of the week as risk sentiment turned more positive with UK's vaccine-driven economic rebound supporting the currency. The pound was relatively muted to data releases during the week, with a disappointing UK CPI being offset by better-than-expected retail sales in the region.
Week ahead
A light UK economic data calendar includes the following:
Calendar
Wednesday 7am | Gross Domestic Product (Q4)
Thursday 9:30am | Markit Manufacturing PMI (Mar)
US Dollar
The US Dollar maintains positive momentum.
Movements
EURUSD began the week at 1.1890 and after briefly moving up to 1.1940 it started to fall on Tuesday, reaching a low of 1.1760 on Thursday and closing with a loss of -0.86% at 1.1788.
GBPUSD opened at 1.3859 and depreciated during the first part of the week to reach 1.3676. It the partly recovered on Thursday and Friday to close with a loss limited to -0.53% at 1.3786.
Movement rationale
The Dollar continues its recovery path, strengthening across the board and rising to a new 4-month high on its trade-weighted index against other major currencies. A market risk-off mood, stronger US economic data (US jobless claims fell to 684k, its lowest level in more than a year and GDP data revised up from 4.1% to 4.3% in the Q4) and a faster vaccine rollout (70% of adults over 65 have received at least one COVID-19 vaccine dose) all contributed to the USD appreciation. The currency then partly eased on Thursday and Friday on the back of a better market sentiment in the last two trading sessions of the week which drove equity prices higher.
Week ahead
The US economic data calendar is shown below, with the key event being the Nonfarm Payrolls:
Calendar
Wednesday 1:15pm | ADP Employment Change (Mar)
Thursday 1:30pm | Initial Jobless Claims (Mar 26), ISM Manufacturing PMI (Mar)
Friday 1:30pm | Nonfarm Payrolls (Mar), Unemployment Rate (Mar)
Euro
The Euro was soft.
Movements
EURUSD began the week at 1.1890 and after briefly moving up to 1.1940 it started to fall on Tuesday, reaching a low of 1.1760 on Thursday and closing with a loss of -0.86% at 1.1788.
GBPEUR opened at 1.1655 and traded with a negative bias during the first half of the week before moving into positive territory to close with a gain of 0.34% at 1.1695.
Movement rationale
The single currency was once again under pressure, with growing concerns that Europe may be entering into a third wave of COVID-19 cases, further delaying the region’s economic recovery. Fresh lockdown measures were announced in Germany, France and Italy, with several European countries recording a worrying resurgence of infection rates. The subsequent deterioration in the Eurozone outlook is weighing on the currency (Eurozone GDP is expected to contract slightly by -0.4% in the first quarter). Some little support was provided by positive data from the Germany's business sentiment, which has improved noticeably despite the lockdown measures in place, reaching its highest level since June 2019.
Week ahead
The Eurozone economic data calendar includes the following:
Calendar
Tuesday 10am | Consumer Confidence (Mar)
Wednesday 10am | Consumer Price Index (Mar)
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