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19th April - Weekly FX Update

Top Currency Pairs Tuesday 19th April 9:00 UTC GBP/USD: 1.30389 (Last Week: 1.30286) EUR/USD: 1.08080 (Last Week: 1.09070) GBP/EUR: 1.20641 (Last Week: 1.19452)

Market News

Pound Sterling The Pound rebounded last week after data released showed consumer price at the highest level recorded since 1981. The UK currency regained some footing off the back of these figures following on from a drop to the lowest level against the Dollar in 18 months, falling to 1.2973. Looking ahead, yesterdays Easter bank holiday kick-started a quiet week to the economic calendar, with no economic indicators until Thursday, where Andrew Bailey is set to publicly speak. This is followed by a few data releases, however the markets will be driven by interest rate speculation after the latest inflation figures continue to pressure the Bank of England (BoE). The rhetoric last month had softened in regard to policy tightening, which prompted some headwind for the Pound. Despite this, investors still expect the bank to hike interest rates to near 2% by the end of 2022, so the BoE will need to match this with consecutive rate hikes for the Pound to maintain strength.

Euro The Euro came under serious pressure last week as the European Central Bank (ECB) took an extremely dovish stance on monetary policy. ECB President, Christine Lagarde, was very reluctant to comment on any imminent interest rate hikes, ensuring the central bank remains idle when it comes to staving off surging inflation. The guidance was largely unchanged from March's update, causing the Euro to slide against a host of G10 currencies with many economists taking the position that the ECB may be behind the curve. Christine Lagarde is set to speak Thursday, but this is expected to have little impact as a more hawkish Bank of England and Federal Reserve could force the Euro even lower.

U.S. Dollar This week, investors will be looking for signals about the pace of policy tightening, after the Federal Reserve's recent hawkish stance gave the Dollar strong support. Having raised rates for the first time in March since 2018, the Fed laid out an aggressive plan to counter the risks posed by soaring inflation and the ongoing war in Ukraine. It is expected that the US central bank will action two back to back .5% interest rate hikes in both May and June. Similar to the UK economic calendar, it is somewhat sparse this week, with a few data releases scheduled for Thursday and Friday. The main catalyst for the Dollar will be speculation and any developments coming out of Ukraine.

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