Currency Note

A quiet data week ahead for sterling-watchers

By Sharyh Murray-Francis April 24th, 2023

Pound sterling enters the final week of April marginally unchanged against the euro following last Friday’s retail sales-led slump.  Against the US dollar, sterling is also in a similar position.

It is a quiet week for pound-watchers this week however, there will be plenty of key economic releases from our eurozone neighbours and others further afield; many of which have the potential to impact currency rates.

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At the end of last week, many watched European stock markets make a fifth- consecutive week of gains, with the benchmark Stoxx 600 finishing at its highest closing level since February 2022.

This morning, eurozone markets have just seen the Ifo business climate for the world’s fourth largest economy Germany. The reading came in at  93.6, below forecasts of 94.4, but still pointing to a rise in confidence.

In US stock markets, the dollar index (DXY) steadied near 101.8 this morning as investors continued to ponder the outlook for the US economy and Fed’s monetary policy.

Against the dollar, the euro sits near an over-12-month high, touched on April 14, as European Central Bank policymakers called for a tighter monetary policy.

On Tuesday, the UK’s public sector net borrowing will be released, along with CBI industrial trends orders and US new home sales. While on Wednesday, the ones to watch will be Germany’s Gfk consumer confidence and US durable goods orders.

On Friday, economists will have plenty to chow down on, with the Bank of Japan scheduled to decide on its latest interest rate, followed by a flurry of key data from Germany and the US.

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GBP: Up next, public sector spending

On the data front, this week is a quiet one for the UK.

Tomorrow economists will see the latest public sector net borrowing figures. In the previous release by the Office for National Statistics, it was reported that the UK’s public sector posted a £15.86bn deficit in February of 2023, compared to a £6.2bn gap the year before. This was largely due to substantial spending on energy support scheme as the UK dealt with higher energy costs.

GBP/USD over the past year

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EUR: Return of Gfk consumer climate

This week eurozone markets will see the return of Germany’s GfK consumer climate indicator. In the last reading, the indicator hit its highest level since July last year, increasing for a sixth consecutive month.

Euro-watchers will be keeping a close eye on Wednesday’s reading.

USD: US business activity booms

In the stock markets, recession fears were dispelled last week as data showed, US business activity grew to an 11-month high in April.  On Friday all major US indices finished the day just over the flatline as investors digested the latest corporate earnings and pondered the Federal Reserve’s future policy path.

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