FX weekly forecast: pound to tumble as UK inflation cools?

Pound (GBP)

The Bank of England (BoE) is likely to provide limited forward guidance following its latest policy meeting this week for fears of influencing the UK’s looming general election. This may leave the UK’s latest consumer price index to act as the main catalyst of movement for the pound (GBP), with Sterling potentially plunging if inflation returns to the BoE’s target rate.

Euro (EUR)

The euro (EUR) is likely to remain vulnerable to French political uncertainty this week. Following the first week of the election campaign President Emmanuel Macron’s party remains behind in the polls, stoking fears that he will struggle to push through his much-needed economic reforms if the government ends up divided.

US dollar (USD)

An expected rebound in US retail sales may provide a boost to the US dollar (USD) in the first half of this week. If market sentiment remains risk-off this may also provide support for the ‘greenback’ throughout the session.

Australian dollar (AUD)

The Reserve Bank of Australia (RBA) will deliver its latest interest rate decision this week. While the RBA is expected to leave its monetary policy unchanged, the Australian dollar (AUD) may appreciate if April’s surprise uptick in inflation causes the bank to signal that another rate hike remains a possibility.

South African rand (ZAR)

The formation of a government of national unity involving the pro-business Democratic Alliance party may help to underpin the South African rand (ZAR) this week. But will a softening of domestic inflation cap the rand’s upside potential?

Canadian dollar (CAD)

Canada’s latest retail sales data may provide a boost for the Canadian dollar (CAD) later this week, as April’s figures are expected to report a sharp rebound in sales growth.

New Zealand dollar (NZD)

The New Zealand dollar (NZD) may potentially face resistance this week with the publication of the latest domestic GDP figures. If they show that New Zealand remained in contraction at the start of the year, the ‘kiwi’ is likely to plunge.

Matthew Andrews

Contact Matthew Andrews


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