Excel Currencies Blog

Historically, April has been kind to the Pound. 3-weeks into the month and there has been no love seen by traders and investors, who have instead bet against Sterling as a whole so far. 

£-€ was performing at a consistent level before Friday, which was at the top of its trading range, but now faces a steep uphill battle to get back. It could be that Sterling has found itself in an oversold environment, which may mean that we see a pull-back at some point this week, but i wouldn't be betting on it. 

This is because of comments made by MPC member Dave Ramsden and BoE Governor Bailey last Friday. Both believe they have seen enough evidence this year that persistent inflation pressures are receding and therefore the bank could begin cutting interest rates before inflation has fallen to the 2% target.

It's therefore likely that the BoE & ECB will cut interest rates at the same time (probably June). This devalues the Pound as money markets have the UK behind Europe in lowering interest rates. The Dollar has gained so much against Sterling recently because of the same reason (the US is likely a while away yet from cutting rates due to its strong economy at the moment).



EUR
The Euro gained 1% versus the Pound last week and if the Euro-Zone's PMI's better that of the UK, we could easily see further gains this week too. It's currently one of the best times this year to sell €-£, albeit still in a trading range favourable to Sterling.



USD
It's nearly 6-weeks worth of gains against the Pound for the Dollar right now and it doesn't look like it's ending anytime soon. The US economy is consistently growing which means they don't have to cut interest rates just yet (unlike the UK). The threat of war strengthens the USD as a safe-haven currency and devalues the £ and the general wave of Dollar strength versus practically all currencies at the moment is hard to ignore. 

Back in October/November last year, the Dollar threatened and was close to pushing Sterling back to the 2022 crash (under 1.10), but was thwarted for a number of reasons at the last minute. If 1.20 mid-market gets breached this time round, it could spell disaster for £-$ for the remainder of the year. 

Upcoming DataMonday 22nd April 202415:00 EU - Euro-Zone consumer confidence 
16:30 EU - ECB President Lagarde speech



Tuesday 23rd April 202407:00 UK - Public sector borrowing
08:15 EU - French PMI's
08:30 EU - German PMI's
09:00 EU - Euro-Zone PMI's
09:30 UK - PMI's
14:45 US - PMI's
15:00 US - New home sales

Thursday 25th April 202407:00 EU - German consumer confidence
07:45 EU - French business confidence 
09:00 EU - ECB economic bulletin
11:00 EU - French unemployment benefit claims
13:30 US - GDP, goods trade balance & initial/continuing jobless claims
15:00 US - Pending home sales