Pound Plunges on Worrying UK Data, Euro Spurred Higher on Hawkish ECB Comments

The Pound suffered a sharp selloff this week as an abysmal retail sales print gave rise to fresh concern over the UK’s economic trajectory. 

At the same time, the Euro was able to trend broadly higher this week, in response to some hawkish remarks from a European Central Bank (ECB) policymaker. 

Pound Tumbles Following Dire Retail Sales Print 

GBP/EUR – Down one cent on the week’s opening levels 

GBP/USD – Down one cent on the week’s opening levels 

The Pound struggled to gain traction this week, with the currency running afoul of some fresh political uncertainty as MPs backed an inquiry into whether Boris Johnson intentionally mislead parliament over the ‘partygate’ scandal.  

The release of the UK’s latest retail sales figures then pushed Sterling to multi-month lows as a sharper-than-expected contraction in sales growth raised concerns over future consumer spending. 

The latest figures from the Confederation of British Industry (CBI) could prove a headache for the Pound next week if they show economic activity weakened in April. 

Euro Bolstered by Hawkish ECB Commentary 

EUR/GBP – Up one pence on the week’s opening levels 

EUR/USD – Unchanged on the week’s opening levels 

The Euro spiked this week following comments from ECB Vice President Luis de Guindos, in which he suggested an interest rate hike in July is ‘possible’.  

While these gains quickly faded, stronger-than-expected Eurozone PMI figures still allowed the single currency to close the week broadly higher. 

EUR investors are likely to keep a close eye on the Eurozone’s latest inflation figures. Will another surge in April potentially put more pressure on the ECB to consider tightening its monetary policy? 

US Dollar Fluctuates in Response to Mixed Risk Appetite 

USD/GBP – Up one pence on the week’s opening levels  

USD/EUR – Unchanged on the week’s opening levels  

The US Dollar trended broadly lower through the first half of this week, with USD exchange rates being undermined by a moderate risk-on mood as well as a pullback in US Treasury yields.  

But a souring of market sentiment, alongside hawkish commentary from Federal Reserve Chair Jerome Powell helped the ‘Greenback’ to bounce back at the end of the week. 

In the spotlight for USD investors next week will be the latest US GDP figures. The preliminary reading for the first quarter is expected to report a slowing of US economic growth, could this weaken the appeal of the US Dollar? 

Australian Dollar Finds Fleeting Gains as Shanghai Lockdown Eases 

AUD/GBP – Unchanged on the week’s opening levels 

AUD/USD – Unchanged on the week’s opening levels 

The Australian Dollar firmed this week as AUD investors welcomed the news that Chinese authorities would begin easing the lockdown in Shanghai, by allowing the reopening of factories.  

However, the ‘Aussie’ the retreated in the latter half of the session, with the risk-sensitive currency falling afoul of a souring market mood. 

The publication of Australia’s consumer price index will no doubt be the focus for AUD investors next week, Will a sharp rise in inflation bolster RBA rate hike expectations and help push the Australian Dollar higher? 

Key Data  

Apr 25 EUR German IFO Business Climate (Apr)  

Apr 25 GBP CBI Industrial Trends (Apr) 

Apr 27 AUD Inflation Rate (Q1) 

Apr 27 GBP CBI Distributive Trades (Apr) 

Apr 28 USD GDP (Q1) 

Apr 29 EUR Inflation Rate (Apr)  

Apr 29 EUR GDP (Q1) 

Apr 29 USD PCE Price Index (Mar) 

Apr 29 USD Personal Spending (Mar)