Pound (GBP) Slips amid Profit Taking
The Pound continued to retreat on Friday as the currency continued to suffer as a result of investors booking their profits in end of month trade.
However, some analysts suggest that the UK’s positive outlook may already be fully priced in, suggesting the correction in GBP exchange rates may have only just begun.
Looking ahead, the main catalyst of movement in the Pound this week looks to be the publication of Chancellor Rishi Sunak’s 2021 Budget. Will an expansion of the UK’s fiscal stimulus help to bolster GBP exchange rates?
Euro (EUR) Undermined by USD Strength
The Euro stumbled at the end of last week’s session, as the single currency’s negative correlation with the US dollar (USD) saw it weaken as the latter strengthened.
Further suppressing demand for the Euro were ongoing concerns over the EU’s vaccination rollout, despite a pledge to ‘accelerate the provision of vaccines’ at the latest EU summit of leaders.
In the spotlight today will be the publication of Germany’s consumer price index, with another acceleration in inflation last month potentially help to buoy the Euro later this afternoon.
US Dollar (USD) Strengthens in Gloomy Trade
The US Dollar initially soared on Friday, with a bump in US Treasury yields and a souring of market sentiment sending investors flocking to the safe-haven currency.
However, this demand was tempered later in the session as a strong rebound in US consumer spending help to cheer markets a little, leaving the ‘Greenback’ to close the session just below its best levels.
Turning to the week ahead, US stimulus developments are likely to be a key focus for USD investors, on the hopes that Joe Biden’s $1.9 trillion stimulus programme could finally be passed by lawmakers.
Canadian Dollar (CAD) Subdued as Oil Prices Slip
The Canadian Dollar was subdued at the end of last week, as the appeal of the commodity-linked currency was undermined by a drop in oil prices.
Australian Dollar (AUD) Rebounds in Risk-On Trade
After tumbling on Friday, the Australian Dollar opened this week’s session on stronger footing, with the ‘Aussie’ rallying through the Asian trading session amidst a recovery in risk sentiment.
Looking ahead, AUD investors will be looking to the Reserve Bank of Australia (RBA) for fresh impetus later tonight as the bank concludes its latest policy meeting.
New Zealand Dollar (NZD) Rallies as Market Mood Improves
The New Zealand Dollar also strengthened in early trade this week as the appeal of the risk-sensitive ‘Kiwi’ was bolstered by a more positive market mood.
Data Releases
09:00 EUR Manufacturing PMI (Feb)
09:30 GBP Manufacturing PMI (Feb)
13:00 EUR German Inflation Rate (Feb)
15:00 USD ISM Manufacturing PMI (Feb)
03:30 AUD RBA Rate Decision