The British Pound fell against the Euro and the US Dollar on Friday as investors raced into safe-haven currencies following an escalation in the Middle Eastern war. Aside from Middle Eastern tensions, UK investors were studying data that showed retail sales stagnated in March despite lower inflation, highlighting the economy’s precarious status.
The Euro began last week on a shaky footing due to dovish comments from European Central Bank policymakers, which hampered the shared currency. In fact, ECB President Lagarde hinted that interest rate reduction would likely occur in June. This puts the ECB in an uncommon position of moving before the Fed, which is expected to keep the Euro under pressure.
The US dollar dipped marginally in Asian trade this morning, but it remains near to over five-month highs against a basket of currencies. The consolidative decision comes as fading chances for a June rate decrease bolstered the dollar, aided by good US inflation figures and hawkish comments from senior Fed members. This week’s focus is on additional clues on US monetary policy, notably from PCE price index data, the Fed’s favoured inflation gauge.
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