Market Report : 24.04.23

Published: 24/04/2023 By ECAP

Sterling rose against the G10 basket last week but gains over the European single currency were among the most limited, after a widely anticipated decline in March retail sales came in larger than was expected on Friday, leading to a last-minute setback. Although the UK services PMI beat forecasts, with activity hitting a one-year high, investors focused on the downbeat sales data causing the Pound to fall sharply. Looking forward, the week ahead brings a lack of notable economic data for the UK. A few mid-tier releases from the Confederation of British Industry could impact, but the pound seems poised to follow global price dynamics and risk sentiment ahead of next week's central bank meetings.

The Euro held steady at the opening of this morning’s trading session, with investors seemingly cautious at the start of a week that includes key regional economic releases. On the economic data front, today’s release sees the widely-watched German Ifo business climate index, which is expected to show a slight improvement in corporate confidence in the Eurozone’s largest economy. Looking forward, the Eurozone is set to release advance data on first quarter GDP on Friday, while April inflation reports from the region’s largest economies Germany, France and Spain are due out the same day. Ultimately, the European Central Bank is widely expected to lift interest rates again in early May, with most analysts expecting a 25-basis point hike, although a larger increase has not been ruled out with inflation proving to be persistent.

The US dollar edged higher in early European trade this morning but was on track for a second straight monthly loss ahead of the release of more economic data which is likely to shed further light on the future path of interest rates. The Dollar Index traded marginally higher at 101.57, but was still on course for a monthly loss of around 1%, having fallen over 2% in March. Moreover, concerns that the US economy is heading for a sharp slowdown have weighed on the dollar index of late, after it hit a 20-year high late last year. Ultimately, the US Federal Reserve is widely expected to raise rates by another 25-basis points at next week's policy-setting meeting as inflation has proved to be stickier than expected, but the focus will be on what happens next amid growing expectations that the central bank will start a loosening cycle this year.