Excel Currencies Blog

BoE speeches will also play a part this week..

GBP

So far, February has been '1-step forward, 2-steps back' for the Pound and has seen either weekly losses or gains. We have a relatively quiet data week ahead (apart from tomorrow) and so movement may be limited on the market in the days ahead.

We have a mini 'super-Tuesday' tomorrow with the majors releasing this month's PMI numbers. It could see an improvement for GBP, with forecasts expected to see a modest uptick on the previous month. The potential volatility could come from comments by the BoE members this week.

Catherine Mann is speaking at the Resolution Foundation about rising interest rates on Thursday and Sylvana Tenreyro is participating in a panel discussion at the "Back to 2% inflation" conference. With central bankers the main drivers in the market currently, anything they comment on will be scrutinised, as traders second guess what may happen at next month's BoE meet.


EUR
The lack of economic data hurt the single currency last week and we may see the same this time round. The £-€ rate is currently range-bound and any upside is extremely limited and so around a 0.5% negative movement may be the result this week.

The EU PMI's are expected to perform similar to that of the UK and apart from consumer and economic confidence, there isn't much else to go on. We already know the stance from the ECB and their current hiking path and so the Euro is a bit of a 'sitting duck' this week. 


USD
The same as the £-€ rate, the £-$ is facing extreme upside at the moment. USD has fought back in February after losing ground easily across the board last month. After the latest round of US inflation data, it's clear the Fed still has some work to do on the interest hiking path which will keep the $ 'strong'.

The path for the USD is relatively simple to predict; an improvement in the global market will lead to USD weakness. Throughout the year, risk sentiment will change hands a lot. So we will see bouts of USD strength when sentiment turns negative, which we are hopefully coming out of about now.