GBP

Sterling has made recovery from yesterday’s 22-month low against a broadly weaker dollar, gaining around a cent. The pound began to find support when data released yesterday afternoon showed that the US economy shrank in the first months of the year, contracting by -0.4% in the first quarter, its weakest quarter since the early days of the pandemic and has steadily improved as market risk sentiment has lessened demand for the safe haven greenback. Against the euro, sterling remained within a tight range. Ahead of the Bank of England’s rate decision next week, mortgage lender Nationwide’s monthly house price survey showed prices rising less than expected this month after expanding at their fastest pace in 18 years in March. Nationwide said the expected rate hike at Thursday’s policy meeting is likely to drag on the market if it feeds into mortgage rates.

EUR

The euro is extending its recovery from 5-year lows hit yesterday against the dollar in early trading. Having been under extreme pressure this week, depreciating by more than 2% against the greenback in the face of central bank policy divergence and Russia’s gas supply cuts to Poland and Bulgaria, important Eurozone data releases this morning could be crucial to the single currency’s fate today. The European Central Bank will be anxiously awaiting inflation data for the bloc, which will no doubt be above 7% again, but the hope is the decline in oil and gas prices in March keeps it no higher than 7.5% seen in March. Economic growth figures for the first quarter are also due.

USD

The dollar index edged off a 20 year high on Friday but was still within sight of its best monthly gain in a decade. It has climbed each week in April, with yesterday morning’s big gains coming when the Bank of Japan reinforced its commitment to its super-low yield policy, which essentially entails the central bank intervening in bond markets to keep the government 10-year bond yield at zero, its own form of quantitative easing. However, the greenbacks rally was stalled when weaker than expected quarterly GDP figures were released. Later today inflation data in the form of Core Personal Consumption Expenditure will be released as well as the final consumer sentiment survey for the month.

Economic Calendar

10:00 EUR GDP (YOY) (Q1)
10:00 EUR GDP (QOQ) (Q1)
10:00 EUR HICP (inflation data)
13:30 USD Core Personal Consumption Expenditure
13:30 USD Personal Income (MoM)(Mar)
13:30 USD Personal Spending (MoM)(Mar)
15:00 USD Michigan Consumer Sentiment Index