By Ashley Finill
As we come back from the four-day break for Easter, the currency markets reopen and with it, we get ready for a new month of data releases for April which will start to dictate the market’s movement. Sterling will be hoping for a better week than last, as it saw out the month on the back foot against the euro as around half a cent had been shaved off from the high the pound had been trading at. This was off the back of the Bank of England choosing to hold interest rates again but with previous dovish members of interest rate hikes also voting to hold interest rates, it could be a sign that the BoE could cut interest rates at their next meeting, something which may not bode well for the pound as the unprecedented rates hikes over the past two years have been one of the main injectors for sterling’s gain on both the Euro and the US dollar.
There are also other banking decisions ahead from the Fed in the US and the ECB in the Eurozone which will also look to make rate cuts in the future, but with the next meetings all at the start of May no definitive decisions will be made in April. But rumour, talks and speeches ahead of the event are likely to create a reaction in the markets, as we have seen over the last few months. Another key data release which impacts the markets is inflation data as economies across the world try to recover from hyperinflation seen since 2021 from post pandemic reality, and various wars all having a big impact on the price of commodities due to supply and demand. Last month the UK inflation figure saw a drop to 3.4%, closer to the 2% target the government is hoping for, and the figure the BoE were supposedly targeting before cutting interest rates, so should we see another drop this month and get closer to that 2% target a cut could be imminent and we can certainly expect Sterling to react to this. With this in mind it may be worth contacting your currency consultant today to protect yourself from any surprise movements in the currency market. We have a few options for you to ponder to minimise your risk and give you peace of mind that any data releases and political decisions do not impact your affordability for your property purchase.
Data releases this week
There are a few data releases to take note of in this shorter 4-day week, all of which come from the Eurozone and US with nothing to note from the UK, which are likely to affect the market. Starting today, CPI data is to be released in Germany at 12pm, an improvement is expected from 2.2% to 2.5% which could give the Euro a boost into Tuesday’s trading. In the afternoon in the US, factory orders will be posted at 2pm. There are also some speeches, from Fed members Bowman, Mester, Williams and Daly later in the day who may give some insight on the Fed’s feeling on interest rate cuts. To tomorrow, CPI, harmonised index of Consumer Prices and unemployment is to be posted by the EU at 9am. In the afternoon, the US announce the ADP Employment change for March at 12.15pm. At 2pm, the US also release S&P Global composite and ISM Services PMI and another round of speeches from Fed members Goolsbee, Barr, Kugler and Fed Chair Powell. A quieter day on Thursday as the only notable releases are CPI data early morning at 6.30am in Switzerland and Producer Price index from the EU at 9am. A busier end to the week on Friday, Overnight Australia post Trade Balance figurers. At 9am, the EU post retail sales figures for February which is expected to see a contraction from 1% to 1.2%. In the afternoon Canada announce their unemployment rate at 12.30pm, at the same time the US also post non-farm Payrolls and the unemployment rate.