Pound Euro Exchange Rate Firms as UK Restrictions Ease, GBP Stops Slide
Sterling stemmed its losses on Friday after plummeting through the week due to a position correction and concerns over the link between the AstraZeneca vaccine and rare blood clots in under 30s, as well as potential vaccine shortages.
The Pound Euro exchange rate halted its decline, while GBP/USD held above $1.37 going into the weekend.
Turning to this week’s session, GBP exchange rates may recover losses as UK lockdown restrictions ease today, with non-essential retail opening potentially boosting Sterling sentiment.
While today’s session lacks notable UK data releases, UK GDP data for February released early Tuesday morning will likely drive further movement in the Pound.
If February’s reading prints at the 0.6% expected or higher indicating a rebound on January’s -2.9% contraction, confidence in the UK economy could improve and support GBP exchange rates.
Euro (EUR) Subdued Following Fall in German Industrial Production
The Euro strengthened through last week’s session although February’s German industrial production figures and a rebound in USD prevented further gains on Friday.
German industrial production unexpectedly contracted for a second successive month in February, falling -1.6%, instead of growing 1.5% as forecast.
This morning’s Eurozone retail figures for February could add some support to the single currency if they meet expectation and show 1.5% growth in February after January’s sharp drop.
However, worryingly high coronavirus cases across Europe and the possibility of tighter lockdown restrictions in Germany continue to weigh on EUR sentiment.
US Dollar (USD) Recovers Ground amid Cautious Market Trade
The US Dollar returned to a stronger footing at the end of last week’s session on increased safe-haven demand after the Fed-driven risk-on trade which characterised the latter part of the week eased.
USD exchange rates also benefited from a surprise uptick in the US producer price index (PPI) as March’s figure revealed a jump in March by 1%, well above the 0.5% expected and suggesting to some investors that the Federal Reserve will raise interest rates sooner than current guidance indicates.
With signs potentially pointing towards a surge in domestic inflation, the US consumer price index published on Tuesday looks likely to drive significant movement in the US Dollar as inflation is expected to have accelerated again in March up to 2.5% from the 1.7% in February.
Canadian Dollar (CAD) Boosted by Drop in Unemployment
The Canadian Dollar (CAD) strengthened on Friday after the latest Canadian unemployment figures revealed a better-than-expected drop in the unemployment in March, printing at 7.5%, down from February’s 8.2%.
However, the ‘Loonie’ was unable to build on these gains as a prevailing risk-off mood and WTI crude holding below $60 limited CAD exchange rates.
Australian Dollar (AUD) Mixed amid Risk-Off Mood
The Australian Dollar was mixed in overnight trade as the more cautious market sentiment that returned at the end of last week continued to subdue AUD exchange rates.
New Zealand Dollar (NZD) Lacks Support as USD Strengthens
The New Zealand is also struggling for traction amid the US Dollar strengthening and a dip in market risk appetite.
Data Releases
10:00 EUR Retail Sales (Feb)
15:30 CAD BoC Business Outlook Survey
02:30 AUD NAB Business Confidence (Mar)