The Pound found itself on the back foot due to a bout of profit taking, even though the UK government confirmed lockdown easing would go ahead as planned on 12 April.
On the other hand, the Euro made gains against many of the majors in spite of the Eurozone unemployment rate showing a surprise upward revision on the month.
Pound Under Pressure amid Profit Taking
GBP/EUR – Down two cents on the week’s opening levels
GBP/USD – Down one cent on the week’s opening levels
Support for the Pound weakened sharply in the wake of the bank holiday weekend, dragged lower by a bout of market profit taking. Sterling then came under further pressure due to doubts over the AstraZeneca vaccine supply, and its links with rare blood clots in under 30s.
The Pound suffered losses through the week despite optimism over the UK’s economic recovery as the country goes ahead with its planned roadmap out of lockdown.
The release of February’s UK trade and gross domestic product data could see the Pound come under further pressure in the coming week. Any reading under the 0.6% forecast growth could weigh on GBP exchange rates.
Euro Defies Rising Eurozone Unemployment
EUR/GBP – Up one pence on the week’s opening levels
EUR/USD – Up one cent on the week’s opening levels
The Euro managed to shrug off the impact of a surprise increase in the Eurozone unemployment rate, even as the labour market looks set for further weakness in the months ahead.
While German industrial production and factory orders data fell short of forecast, this was not enough to weigh down the single currency this week, instead making gains from its negative correlation with the US Dollar.
As long as the latest ZEW economic sentiment index reading points towards a sharp uptick in confidence on the month, the mood towards the Euro could improve further in the coming week.
US Dollar Fails to Benefit from Surge in Payrolls
USD/GBP – Unchanged on the week’s opening levels
USD/EUR – Down one cent on the week’s opening levels
A stronger-than-expected non-farm payrolls report and record growth in the ISM services PMI failed to give the US Dollar a boost against its rivals.
Instead, the strong economic data strengthened market risk appetite and equity markets which eroded safe-haven demand and lowered US Treasury yields, weighing on USD exchange rates. Meanwhile, the Federal Reserve’s dovish meeting minutes added to US Dollar weakness.
However, with forecasts pointing towards a sharp uptick in March’s inflation rate, the US Dollar could find itself trending higher across the board once again.
Australian Dollar Bolstered by Market Risk Appetite
AUD/GBP – Unchanged on the week’s opening levels
AUD/USD – Unchanged on the week’s opening levels
While the Reserve Bank of Australia (RBA) expressed a degree of optimism in the economic outlook at its April meeting, the appeal of the Australian Dollar remained initially muted this week.
Even so, as the International Monetary Fund (IMF) raised its economic forecasts and the US Dollar fell out of favour, the ‘Aussie’ found itself gaining ground, benefitting from increased demand for higher-yielding assets.
Solid performances from the NAB business confidence index and the Westpac consumer confidence index could help to shore up the Australian Dollar further in the days ahead.
Apr 12 EUR Eurozone Retail Sales (Feb)
Apr 13 AUD NAB Business Confidence Index (Mar)
Apr 13 GBP Balance of Trade (Feb)
Apr 13 GBP Gross Domestic Product (Feb)
Apr 13 EUR Germany ZEW Economic Sentiment Index (Apr)
Apr 13 USD Inflation Rate (Mar)
Apr 14 AUD Westpac Consumer Confidence Index (Apr)
Apr 15 AUD Unemployment Rate (Mar)
Apr 15 USD Retail Sales (Mar)
Apr 16 EUR Balance of Trade (Feb)