Firstly, I hope you are all refreshed after the bank holiday- before we got our long weekend, we saw a very strong push on the GBPEUR exchange rate above 1.21 and GBPUSD above 1.31. What was most fascinating is this happened with no real economic data or news to fuel it. Generally, when this happens it gives us a good reason to note the strength of a currency, and the Pound is showing real resilience so far this year. The Bank of England has raised rates 3 times since December, and unfortunately, it has not been able to curb inflation by even 0.1%- which only says that it is too little too late, and we need more rate rises- the only positive here, is that most other countries are in the same boat, so it is hard to single out the UK in this.
Generally speaking- the Bank of England will be a lot more hawkish than the ECB (And already has been)- and this could fuel a much higher GBPEUR price- this is not something I expect overnight, but worth watching out for, if we begin to see a break of 1.22 on GBPEUR- then it is not a distant trip to get to 1.25.
GBPUSD is slightly trickier- with ongoing geopolitical issues and the Fed raising rates- it seems investors are still flocking to the U.S Dollar as a safe haven, which means that the Cable price is most likely to remain pretty subdued for the near future- if the BoE raises again in May, it seems the Fed will as well, so any Sterling gains will be capped.
EURUSD seems to now be getting to a point where buyers may begin to get interested- we could see slightly lower prices down to the 1.05 region if the ECB remains dovish, but overall, 1.08 seems like a pretty good place to be selling Dollars for Euros in case we get a move back higher, the Euro usually moves sharply and the economy requires a much higher price for feasibility in trade.
Overall, we are no expecting a busy week data-wise, but if you have any questions or any currency pairs you would like some analysis on- please don’t hesitate to contact me.