• Audere Research

Weekly FX Outlook May 4th


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GB Pound

Sterling was quiet.


Movements

GBPUSD opened at 1.3927 and traded mostly sideways during the week, briefly moving up to 1.3980 on Thursday before retracing and ending at 1.3853 (-0.53%)


GBPEUR opened at 1.1510 and remained rangebound all week to close relatively unchanged at 1.1529 (+0.16%).


Movement rationale

With a lack of data from the UK economy and traders remaining cautious ahead of the Bank of England’s policy meeting this Thursday, last week investor focus shifted to other events, including some political developments in Westminster. PM Boris Johnson was repeatedly attacked on his response to the pandemic, who paid for the refurbishment of his flat, as well as the inquiry into leaks of private information from his office. This may have limited Sterling appreciation against the Dollar and other rival currencies. The only meaningful economic data release came from the housing market, with April posting the biggest monthly rise in UK house prices since February 2004.


Week ahead

With UK data still thin this week, GBP investors are likely to remain focused on domestic politics and BoE policy meeting.


Calendar

Tuesday 9:30am | Markit Manufacturing PMI(Apr)

Thursday 12am | BoE Interest Rate Decision


US Dollar


The US Dollar recovered some ground towards the end of the week.


Movements

EURUSD began the week at 1.2100 and remained supported during the first half of the week to reach 1.2150 on Thursday (2-month high). The pair then sharply reversed the movement on Friday to close with a loss of 0.69% at 1.2016.


GBPUSD opened at 1.3927 and traded mostly sideways during the week, briefly moving up to 1.3980 on Thursday before retracing and ending at 1.3853 (-0.53%)


Movement rationale

The Dollar opened the week trading lower, with the US Dollar Index reaching a 2-month low on Thursday, down 2.9% since the start of April, as investors turned optimistic about global growth prospects. The currency movement was also driven on Wednesday by the Federal Reserve’s latest policy meeting as the central bank struck a very dovish tone, waving off talk of shifting its monetary policy and believing it is too early to consider rolling back the central bank’s emergency support.

However, the USD rebounded sharply on Friday, seemingly driven by the month-end flow dynamic and profit-taking on dollar short positions.


Week ahead

The US economic calendar includes the following:


Calendar

Wednesday 1:15pm | ADP Employment Change (Apr), ISM Services PMI (Apr)

Thursday 2:30pm | Initial Jobless Claims (May 1)

Friday 1:30 pm | Nonfarm Payrolls (Apr)


Euro


The Euro had a calm week.


Movements

EURUSD began the week at 1.2100 and remained supported during the first half of the week to reach 1.2150 on Thursday (2-month high). The pair then sharply reversed the movement on Friday to close with a loss of 0.69% at 1.2016.


GBPEUR opened at 1.1510 and remained rangebound all week to close relatively unchanged at 1.1529 (+0.16%).


Movement rationale

The Euro remained supported and despite a temporary decline on Wednesday as consumer confidence surprisingly fell in Germany, the currency quickly recovered the losses to hit a two-month high against the Dollar. Comments from ECB President Christine Lagarde somewhat pushed the single currency up after suggesting there is “light at the end of the tunnel” and that the Eurozone “could see a robust economic rebound in the second half of the year”. On the data front, the Eurozone officially fell into a double-dip recession in the first three months of this year as output dropped by 0.6%, driven by a Covid resurgence and additional lockdown measures.


Week ahead

The Eurozone economic data calendar includes the following:


Calendar

Wednesday 9am | Markit PMI Composite (Apr)

Thursday 10am | Retail Sales (Mar)


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