After another volatile trading week, Sterling ended on a positive note thanks to unexpectedly strong UK retail sales data released on Friday. The better-than-anticipated figures provided a welcome boost to the Pound, suggesting consumers remain resilient despite ongoing economic uncertainty. Sterling finished the week notably stronger, and with no significant news emerging over the weekend, markets have a relatively clear run into the final days of April.
Monday is quiet on the economic calendar, allowing traders a brief pause before events pick up on Tuesday. The day begins with Eurozone consumer confidence data, expected to come in weaker at -16.7 compared to last month. Given the current strength of the Euro, however—particularly against the weakening Dollar—markets are unlikely to react strongly unless the figure significantly deviates from expectations. Alongside consumer confidence, Eurozone industrial sentiment data will also be released, again anticipated to reflect ongoing economic headwinds with another negative reading.
Wednesday brings a busier schedule and will likely be the most closely watched day of the week. GDP data from France, Germany, Italy, and the broader Eurozone will all be reported. Eurozone GDP is forecast at 0.2%, modest yet positive given recent market turbulence. Any unexpected surprises here could trigger some Euro volatility, although broader market sentiment remains supportive for the single currency for now.
Later on Wednesday, attention shifts to the highly anticipated U.S. GDP report, forecast to show annualised growth of around 3.1%. While strong growth would signal a turning point and perhaps restore some confidence in the U.S. economy, recent market stresses from tariffs and policy uncertainty make a downside surprise quite plausible. Traders should approach this release with caution, as a weaker-than-expected GDP figure could accelerate recent Dollar declines. Wednesday also features U.S. Personal Consumption Expenditures (PCE) inflation data and ADP employment figures—both crucial indicators for future Federal Reserve policy. Employment data is expected weaker, potentially applying further downward pressure to the Dollar ahead of Friday’s Non-Farm Payrolls (NFP) release.
On Thursday, May 1st, markets across many countries will be quieter due to Labour Day holidays, but Japan will draw focus with the Bank of Japan’s (BoJ) interest rate decision. No immediate change in rates is expected, but traders will closely monitor the BoJ’s commentary for hints of a future rate hike. Any forward guidance indicating tightening in policy could bolster the Yen.
Thursday is also notable for the UK due to local elections, providing a political barometer that may impact Sterling. Additionally, UK Manufacturing PMI is set for release, with a slightly weaker reading expected—potentially causing mild pressure on the Pound. Conversely, U.S. manufacturing PMI is forecast to rise to 50.7, possibly providing modest support to the struggling Dollar.
Finally, Friday closes the week with important Eurozone flash inflation data, expected higher at 2.5%. A rise in inflation could reinforce the European Central Bank’s cautious stance on rate cuts, underpinning further Euro strength. The main event, however, will be the U.S. Non-Farm Payrolls report, with market consensus predicting a lower job creation figure. A weaker employment number could significantly accelerate Dollar losses by increasing expectations of Federal Reserve rate cuts. However, given the historical unpredictability of this release, markets should remain prepared for potential surprises in either direction.
With another week of potentially high volatility ahead, staying proactive and informed is essential. Should you require guidance or assistance with currency strategies, please don’t hesitate to get in touch.