Currency Note

Pound enters four-day week on mixed footing

By Sharyh Murray-Francis April 11th, 2023

Analysts at Springboard said the UK’s high streets saw a 18.6% rise in footfall on Good Friday.

Sterling enters the four day week around -0.08% weaker against the euro compared to this time last week. Against the US dollar, the pound continues to rally but is still weaker on a weekly footing.

According to analysts at Springboard, the UK’s high streets saw a rise in footfall on Good Friday, compared with last week and the same time last year. Although below pre-pandemic levels, the number of shoppers over the Easter bank holiday weekend  “exceeded all expectations” with a rise of 18.6% across the UK.

The bank holidays on Friday and Monday meant it was a very quiet day in the data world for several countries – including the UK. However, in other areas of the globe, the economic data continued to roll out. On Monday markets saw the latest consumer confidence from Japan, which hit 33.9, its highest reading since May 2022.

Also on Monday, Federal Reserve Bank of New York president, John Williams, spoke at a discussion at The Economics Review yesterday.

Today, Federal Reserve Bank of Philadelphia president Patrick Harker will speak on America’s economic outlook at an event hosted by Wharton Business School. Markets will be listening for any hawkish comments which could boost the dollar.

Over the course of today, the International Monetary Fund (IMF) will hold meetings with its representatives and world Bank leaders – similar to speeches from Fed officials, economists will be listening for any comments which could cause volatility.

Pound, euro and dollar-watchers will have lots to digest tomorrow. The Bank of England’s governer, Andrew Bailey, will deliver a speech on the resilience of the global financial system while over in the eurozone, vice-president of the European Central Bank, Luis de Guindos will speak. Meanwhile in the US, all eyes will turn to the U.S. Bureau of Labor Statistics for the latest inflation figures.

Following the stronger demand for Liquefied natural gas (LNG) facilities, US natural gas futures rose more than 10% in the second week of April.

In wider currency news, the Japanese yen weakened on Monday, losing nearly 1% against the US dollar. This was in the wake of general dollar strength plus the new Bank of Japan, governor Kazuo Ueda’s signal that the BoJ would not make any significant changes to monetary policy.

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GBP: GDP returns on Thursday

The UK’s month-over-month GDP figures are scheduled to be released by the office for national statistics (ONS) on Thursday.

January’s GDP data revealed the British economy grew 0.3% month-over-month, bouncing back from a 0.5% contraction at the end of last year when the wave of industrial strikes impacted the UK’s economic activity.

Markets are expecting February’s figures to rise by 0.1%.

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EUR: All eyes on Germany’s inflation rate

Preliminary estimates showed that Germany’s annual consumer price inflation eased further to 7.4% March, down from 8.7% in the previous two months. Many are expecting that number to remain unchanged on Thursday when the Federal Statistical Office will release its data.

If the rate meets or exceeds forecasts this may please markets and potentially boost the euro.

USD: Nonfarms cool

On Friday US markets saw the latest nonfarm payroll data from the U.S Bureau of Labor Statistics. This was a big one for market-watchers looking for an insight into US economic activity – as the creation of jobs is one of the leading indicators of US consumer spending.

According to the data, the US economy created 236,000 jobs in March, which was the lowest amount since December 2020. It was also less than forecasts of 239,000. Despite pointing to a gradual cooling in hiring, the latest figures still point to a strong US labour market.

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