Monthly Currency Report – April 2023

Friday 28th April – Despite the lack of significant economic data, the Pound gained strength on Friday. The optimistic market sentiment and ongoing speculation of another Bank of England (BoE) interest rate hike contributed to the Pound’s rise.


Conversely, the Euro struggled at the end of last week’s trading session due to the Eurozone’s latest GDP data, which fell short of expectations, indicating a meagre 0.1% recovery in the first quarter of the year. However, the Euro later found some support thanks to its inverse correlation with the weakening US Dollar (USD).

On Friday, the USD experienced a decline as USD bulls were disappointed with the latest US inflation figures. Even though the core PCE price index indicated persistent inflationary pressures, the headline rate decreased more than anticipated. As a result, some currency traders who were expecting higher readings were disappointed, which put selling pressure on the Greenback.

Thursday 27th April

The Pounddisplayed mixed movement without a clear directional bias due to a lack of significant economic data from the UK. Furthermore, concerns about the UK’s investment landscape weighed on the Pound’s attractiveness, while the ongoing speculation of a Bank of England (BoE) rate hike limited GBP’s losses.

In contrast, the Euro struggled yesterday due to lower-than-expected data. The Eurozone’s economic sentiment index stagnated in April, while a decrease in consumer inflation expectations dampened expectations of a rate hike from the European Central Bank (ECB). Additionally, the Euro faced downward pressure due to its inverse correlation with the strengthening US Dollar (USD).

During the European session, the USD gained ground, recovering some of its overnight losses, as the market predicted another rate hike from the Federal Reserve.
In the afternoon, the US GDP data caused some volatility as the economic growth rate slowed more than anticipated. Nonetheless, evidence of persistent inflationary pressures cemented expectations of a Fed hike next month, leading to a boost in the USD.

Wednesday 26th April

The Pound gained ground without an apparent catalyst for the movement. Later in the session, the GBP received a further boost from stronger-than-expected sales data released by the Confederation of British Industry (CBI). Additionally, ongoing speculation of a Bank of England interest rate hike provided support for the UK currency.

Meanwhile, the Euro received an early lift yesterday morning from optimistic German data. Consumer confidence in the Eurozone’s largest economy increased beyond expectations to reach a 13-month high. Moreover, comments from two European Central Bank rate-setters added to the positive sentiment among EUR investors. Policymaker Boris Vujčić called for further policy tightening, while ECB Vice President Luis de Guindos expressed confidence that the Eurozone would avoid a recession this year.

Despite the risk-off market mood, the safe-haven US Dollar did not benefit from yesterday’s trading as markets downgraded their expectations for further Federal Reserve rate hikes in light of renewed turmoil in the US banking sector. In the afternoon, however, the USD selloff was slowed down by promising US data. Durable goods orders made a remarkable recovery of 3.2%, exceeding the forecast of 0.7%.

Tuesday 25th April

The Pound weakened due to signs of easing inflationary pressures, which dampened Bank of England rate hike bets. The Confederation of British Industry (CBI) surveys revealed that cost pressures had eased for manufacturers.

Additionally, BoE policymaker Ben Broadbent commented that inflation seemed to be decreasing. His remarks echoed those of former BoE Chief Economist Andy Haldane, who predicted on Sunday that UK inflation would fall rapidly soon.

The Euro struggled to find direction yesterday due to a lack of economic data from the Eurozone. Although a downbeat market mood helped the single currency rise against its riskier peers, the EUR was hampered by its negative correlation to a strengthening US Dollar.

Meanwhile, the US Dollar rallied yesterday as investors flocked to the safe-haven currency amid widespread risk aversion. Fears surrounding the future of US regional bank First Republic triggered a 20% drop in its shares, rattling investors. The selloff spread to European markets, and the anxious market sentiment bolstered USD exchange rates.

Monday 24th April

It was a difficult start for the Pound as it couldn’t find direction due to a lack of economic data. Despite this, expectations that the Bank of England (BoE) will increase interest rates next month limited the currency’s losses against its counterparts.

On the other hand, the Euro initially gained support yesterday due to an increase in German business morale. In addition, hawkish comments from European Central Bank (ECB) policymaker Pierre Wunsch helped to strengthen the Euro. Wunsch indicated that the bank would like to see wage growth and core inflation decreasing before halting its tightening cycle.

In contrast, the US Dollar weakened yesterday, despite the cautious market mood, as the yield on the 10-year Treasury note declined to a one-week low, weighing on the currency’s exchange rates.

Friday 21st April

The Pound experienced a significant drop at the beginning of the day after the latest retail data for March showed a decline in sales. As the day progressed, Sterling was able to regain some ground, thanks to a stronger-than-anticipated services PMI, which provided the currency with some much-needed support.

Meanwhile, the Euro experienced an upward trend towards the end of last week, following the release of April’s PMI surveys. Although the Eurozone’s manufacturing sector contracted more than expected, the private sector’s overall activity surprisingly accelerated from 53.7 to 54.4.

Initially, the US Dollar strengthened on Friday, as a negative market sentiment boosted the currency’s appeal as a safe haven. However, as the session progressed, the risk appetite grew stronger, driven by encouraging economic data from both the US and Europe, resulting in the USD trimming its gains in the afternoon.

Thursday 20th April

Thursday saw the Pound being supported by persistent bets on a 25bps rate hike by the Bank of England (BoE) in May. However, Sterling’s gains were limited by expectations that the May hike might be the central bank’s final one.

Similarly, the Euro experienced an upward trend throughout Thursday, boosted by a risk-off mood and expectations of further rate hikes by the European Central Bank (ECB). However, mixed signals from the latest ECB minutes limited EUR gains as there was evidence of a split amongst policymakers.

The US Dollar started Thursday with a strong footing due to a cautious market mood and Federal Reserve rate hike bets. Nevertheless, disappointing data releases caused the currency to lose its gains throughout the day, as jobless claims rose above forecasts and indicators of the US manufacturing sector’s health tumbled.

Wednesday 19th April

The Pound gained ground following the release of the UK’s latest consumer price index, which surpassed expectations. The headline inflation rate remained in double digits at 10.1%, while core inflation remained steady at 6.2%, increasing the likelihood of another Bank of England (BoE) interest rate hike next month and thereby supporting the value of Sterling.

Meanwhile, the Euro faced some challenges on Wednesday, as markets reacted to the Eurozone’s final inflation rate reading. The CPI showed a sharp slowdown in headline inflation but a modest increase in the core rate, causing the EUR to fluctuate.

The US Dollar initially gained strength on Wednesday, driven by a risk-off market mood and rising US Treasury yields. However, the USD lost its gains in the second part of the session as a lack of US economic data left the ‘Greenback’ exposed to losses.

Tuesday 18th April

On Tuesday the value of the Pound was unstable as investors evaluated a mixed UK labour market report. While wage growth surpassed forecasts, increasing expectations for another Bank of England (BoE) interest rate hike next month, an unexpected rise in UK unemployment rattled GBP investors.

At the same time, an unforeseen decline in German investor morale put pressure on the Euro. The country’s economic sentiment index dropped from 13 to 4.1, instead of rising to 15.3 as expected. Despite this setback, the EUR managed to avoid steeper losses due to its negative correlation with the US Dollar (USD), which weakened on the day.

The USD initially struggled due to an optimistic market mood that weighed on the safe-haven currency. However, as the session progressed, the market sentiment turned negative, curbing further losses for the ‘Greenback.’

Monday 17th April

The Pound experienced fluctuations yesterday as markets reacted to mixed predictions regarding the Bank of England (BoE). While a Reuters poll of economists revealed a narrow majority expecting another interest rate rise next month, most economists polled by Bloomberg predicted the BoE would leave rates unchanged. This uncertainty caused Sterling to oscillate.

The Euro faced a decline due to its negative correlation with the US Dollar (USD) as the latter gained strength. The EUR’s problems were exacerbated by the souring mood around the Russia-Ukraine crisis. The relationship between Russia and the West worsened after a critical Kremlin critic was sentenced to 25 years in prison, and fears mounted that the Black Sea grain deal would fall through, further weakening the Euro.

On the other hand, the US Dollar was bolstered by Federal Reserve interest rate bets as markets continued to anticipate a 25bps hike following hawkish comments at the end of last week’s trade. Additionally, a surprise jump in US inflation expectations also fueled rate hike bets, which contributed to the USD’s gain.

Friday 14th April

Towards the end of last week’s trading session, the Pound experienced a decline, as ongoing headwinds from the UK’s disappointing GDP report on Thursday continued to impact the currency. In light of a negative market sentiment, Sterling weakened against its safer counterparts, while registering modest gains against its riskier peers.

On the other hand, the Euro had some success on Friday as the likelihood of a 50 basis points interest rate increase from the European Central Bank (ECB) became more probable, thanks to recent hawkish comments from ECB policymakers. Nonetheless, the EUR struggled to achieve significant gains due to its inverse relationship with the US Dollar, which was on the rise.

The US Dollar also saw a rally on Friday, recovering much of the losses it incurred during the week, following hawkish statements from a Federal Reserve policymaker. Fed Governor Christopher Waller expressed his opinion that persistent underlying inflation would necessitate additional rate hikes, propelling the ‘Greenback’ higher.

Thursday 13th April

Yesterday, the Pound suffered a setback following the release of a disappointing GDP report. According to the newly-released data, the UK economy failed to grow by the expected 0.1% in February, instead experiencing a standstill due to widespread strike action that weighed on productivity. This report shattered the recent economic optimism in the UK, thereby impacting the GBP negatively.

Meanwhile, the Euro struggled to make gains despite its inverse correlation with the weakening US Dollar and better-than-expected Eurozone industrial production. Concerns surrounding the situation between Russia and Ukraine weighed on the single currency, and a risk-on mood among investors also undermined the typically safer Euro.

In contrast, the USD continued its decline yesterday due to the dovish meeting minutes released by the Federal Open Market Committee (FOMC) on Wednesday night, which created lingering headwinds for the currency. Later in the session, an unexpected drop in US producer price inflation added further pressure to the ‘Greenback’, leading to a reduction in market expectations for more Federal Reserve interest rate hikes due to rapidly cooling American inflation.

Wednesday 12th April

During the session, the Pound experienced a decline, which could be attributed to fresh political concerns regarding the situation in Northern Ireland. Bank of England (BoE) Governor Andrew Bailey provided some support to Sterling in the afternoon, reiterating that the UK banking sector is strong and that recent financial turmoil would not derail the bank’s monetary policy plans.

Meanwhile, the Euro received modest support yesterday morning due to comments from European Central Bank (ECB) policymaker Francois Villeroy de Galhau, who highlighted the risks of entrenched inflation and raised expectations of further rate increases. In the afternoon, the EUR received further tailwinds thanks to its negative correlation with the US Dollar.

The USD saw a slump yesterday following a larger-than-expected drop in US headline inflation, which decreased by a full percentage point from 6% to a near two-year low of 5%. Although core inflation rose slightly as expected, economists noted that this was due to a delay in services and rent inflation, indicating an overall slowdown in inflation and easing pressure on the Federal Reserve to raise interest rates.

Tuesday 11th April

Yesterday, the British Pound received a boost as the International Monetary Fund (IMF) improved its forecast for the UK economy this year. Despite this, the IMF still predicts a decline for the UK in 2023, which limited the potential for the GBP to rise. Meanwhile, the

Euro benefited from its inverse correlation to the US Dollar, which was weakening at the time. However, the EUR’s gains were restricted by a decrease in Eurozone retail sales in February, which contracted by 0.8%.

As for the US Dollar, a positive market sentiment had a negative impact on the safe-haven US Dollar, although the currency’s losses were limited by an increase in US Treasury yields. USD investors appeared to be cautious ahead of today’s release of the consumer price index, which may have curtailed the currency’s movements.

Friday 7th April

Last week, the Pound experienced a subdued performance in the absence of economic data and low trading activity due to the Good Friday bank holiday. As the market sentiment deteriorated on Thursday, Sterling weakened against its safe-haven counterparts.

On the other hand, the Euro received a boost after upbeat German data was released, showing a 2% rise in industrial production in February, exceeding the projected 0.1%. Furthermore, EUR received additional support on Friday from hawkish comments by European Central Bank (ECB) policymaker Klaas Knot, who indicated that the bank was not done with raising interest rates.

Meanwhile, the US Dollar (USD) gained ground towards the end of last week’s trading session, as investors preferred the safe-haven currency due to a nervous market mood. The USD received further positive momentum on Friday, after the release of robust US job data, which exceeded expectations. The American jobless rate unexpectedly decreased, while non-farm payrolls surpassed forecasts, indicating a sturdy US labour market, and reinforcing Federal Reserve rate hike predictions.

Wednesday 5th April 

Yesterday saw some positive developments for the Pound, with the currency recovering from overnight losses. The upbeat mood in the market, combined with expectations of another interest rate hike from the Bank of England (BoE) following recent remarks from Governor Andrew Bailey and a surprise growth in Q4 GDP on Friday, provided support for Sterling.

On the other hand, the Euro experienced mixed movement, with a softening against some of its stronger counterparts but making gains elsewhere. The Euro’s safe-haven appeal was dampened by the overall cheery market mood, although the currency benefited from its negative correlation with the tumbling US Dollar.

Speaking of which, a risk-on market sentiment caused the safe-haven US Dollar to lose ground against many of its peers. The decline could be attributed to the lingering effects of Friday’s core PCE price index, which unexpectedly decreased and may have dampened expectations of Fed rate hikes.

Tuesday 4th April

Despite a lack of economic data from the UK, the Pound made gains during yesterday’s trading session. The positive movement was driven by market speculation that the Bank of England (BoE) will implement at least one more interest rate hike in the near future, which has been fueled by recent optimism regarding the British economy.

Meanwhile, the Euro experienced mixed movement at the start of the day. Although encouraging trade figures from Germany boosted the EUR, the positive sentiment was offset by declining consumer inflation expectations, which put a damper on the possibility of a rate rise by the European Central Bank (ECB). However, in the afternoon, the common currency received some support due to its negative correlation with the US Dollar (USD), which faced strong selling pressure throughout the day.

The US Dollar began to weaken at the opening of the European session due to a buoyant market mood that reduced demand for the safe-haven currency. The USD tried to recover some ground as the day went on, but weaker-than-anticipated job openings and factory orders had a notable impact on the ‘Greenback’, undermining its efforts to rebound.

Monday 3rd April

The Pound made a comeback after experiencing overnight losses, buoyed by expectations of another interest rate hike by the Bank of England (BoE) and a positive market sentiment. BoE Governor Andrew Bailey’s recent remarks, coupled with Friday’s surprise growth in Q4 GDP, have led markets to anticipate a 25bps rate hike at the next meeting.

The Euro, on the other hand, had mixed movement on the day, weakening against its stronger counterparts but gaining ground elsewhere. The overall upbeat market mood reduced demand for the safer Euro, although the currency benefited from its negative correlation with the falling US Dollar.

The US Dollar faced pressure from a risk-on market sentiment that weakened its appeal against many of its peers. Additionally, Friday’s core PCE price index, which unexpectedly declined, may have contributed to the currency’s sluggish performance. The USD experienced further challenges in the afternoon as the ISM manufacturing PMI came in below expectations. US factory activity slumped to a three-year low, prompting additional selling around the Greenback.



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