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Central banks in the spotlight for the week ahead

GBP - British Pound

It’s been a tough week back after the Easter holidays for Sterling, losing ground against most of its major counterparts. Brexit talks still dominate price action and with limited fresh news emerging the Pound has been losing ground. Cross party talks will continue this week and it appears the 2 parties are still some way off of finding common ground, this will place selling pressure on Sterling for sure. Resignations, no confidence votes and the Brexit clock ticking down we can expect more of the same for the week ahead.

UK data of late has been surprisingly good but has largely been brushed aside amidst the Brexit headlines and this week could be a bit of non-market mover. Attention turns to the BOE rate decision on Thursday. There’s little reason to believe Carney and co will shift its policy as the odds on a move higher in interest rates for the rest of 2019 sits below 25%. Other economic releases to watch out for this week will be all 3 PMI’s, kicking off from Wednesday.

Cable still sits shy of the 1.30 handle where a break below 1.29 could be a possibility this week. GBP/EUR traded within a 20 point range for most of Friday and at the time of writing we sit at 1.1590.

Key Movers

Headline from Friday came from across the pond. US Advance GDP posted a solid improvement of 3.2% from the previous quarter, 2.2% was expected. Whilst on paper the number appears strong it’s the underlying data most were focused on. The heart of the economy, private sector consumption and investment, slowed sharply to 1.3% annual rate, the slowest growth in nearly 6 years. Consumer spending rose only 1.2%, after a healthy 2.5% in the previous quarter. Spending on durable goods plunged 5.3%, the worst since 2009. We can assume most of these numbers point towards a slowing economy but this isn’t a reason to panic. It will however cement the FED'S view to pause on any rate hikes for the foreseeable. On that note, we have the pleasure of hearing from the FED this Thursday when we have the latest rate announcement amongst a packed US calendar.

EUR/USD moved off the May 2017 lows following the release but could be tested again this week as we have a packed calendar for the Eurozone.

AUD/USD is only just keeping its head above 0.70 as the chances of a rate cut from the RBA in May sits close to 70%. It’s a relatively quiet week down under but China-US trade talks resume in Beijing on Wednesday so we could get some price action from this.

Expected Ranges

GBP/USD: 1.2880 - 1.2990 ▲

GBP/EUR: 1.1510 - 1.1620 ▲

GBP/AUD: 1.8280 - 1.8390 ▼

GBP/NZD: 1.9290 - 1.9490 ▼

GBP/CAD: 1.7350 - 1.7550 ▼