By Kian Songra
Markets begin the week cautiously after a mixed currency performance last week. The Pound remains under pressure against the Euro, slipping to 15-month lows. Despite a surprisingly strong UK GDP figure of 0.5% on Friday, GBP/EUR drifted lower, highlighting how even positive data can struggle to lift a currency amid broader uncertainty. Shifting central bank expectations, geopolitical tension, and renewed trade risks are weighing heavily on sentiment.
In contrast, GBP/USD gained ground as the Dollar softened, reaching a six-month high on the pair. This presents a timely opportunity for those purchasing Dollars or pegged currencies like the UAE Dirham and Saudi Riyal.
With Good Friday approaching and many global markets set to close early, traders are bracing for a compressed but potentially eventful week. Volatility remains in focus as inflation data, central bank decisions, and trade war rhetoric all carry the potential to move markets.
Monday kicks off quietly with no major releases from the UK or US, but the tempo picks up quickly. Therefore, tariff talk, and potential geopolitical escalations will look to drive market movement. Trump has already come out this morning to say there will be ‘very specific’ details on semiconductor chips today, as well as talks of exemptions on certain products to stir up further uncertainty.
Tuesday brings UK jobs data and Germany’s ZEW sentiment index. Unemployment is the standout data release of the day, which is set to remain unchanged at 4.4%. Stronger UK labour figures could support Sterling, while weaker Eurozone sentiment would strengthen the case for monetary easing later on in the week.
UK inflation takes the spotlight on Wednesday, with CPI expected to edge lower from 2.8% to 2.7%. Any upside surprise could delay rate cut expectations and push Sterling higher. Meanwhile, the Bank of Canada will also announce its latest interest rate decision. While no change is expected, dovish guidance could soften the Canadian Dollar, useful for those with Loonie requirements.
On Thursday, all eyes turn to the European Central Bank. A 25bps rate cut is widely priced in and would mark the sixth since June 2024. With inflation cooling and growth lagging, this move is seen as a shift into an easing cycle. Christine Lagarde will speak in the press conference 30 minutes after the interest rate decision. Comments will be closely scrutinised by market participants, looking for potential insight into the Eurozone’s future plans. Later Thursday, US jobless claims and speeches from Fed officials round out the data. With the Fed still undecided on timing its next move, markets remain sensitive to labour data and central bank comments.
Across the board, trade tensions continue to dominate sentiment. Donald Trump’s renewed push for reciprocal tariffs has reintroduced uncertainty to global markets. If tensions escalate, the inflationary impact of higher import costs could complicate monetary policy—particularly for central banks like the ECB, which are preparing to ease their policy stance.
All in all, those with upcoming requirements face a dense but important week. With central banks preparing to pivot and inflation data continuing to evolve, FX markets remain highly reactive. Clients with GBPEUR requirements especially should remain alert compared to just two weeks ago, a £100,000 transfer into Euros now costs roughly £3,000 more. With central banks pivoting and trade risk looming, staying connected with your currency consultant is more crucial than ever.