Over the last week, the pound has fallen steadily versus the euro while remaining flat against the dollar. The market is now looking ahead to the Bank of England’s policy report on Thursday; no rate changes are expected; but, if the commentary points to a June rate decrease, the Pound is at risk of falling against its peers.
The Euro has made gains against Sterling and the Dollar, with EURUSD reaching a four-week high. The single currency has benefited from the dollar’s depreciation following the US jobs report last week. With Eurozone inflation being low, the ECB is becoming more confident in its ability to lower rates soon, with reports indicating that the first step will occur at the June meeting. With the exception of some retail sales data due today, the Eurozone has a quiet week.
Last Friday’s US employment report showed a substantially lower non-farm total of 175k jobs added, compared to the 238k predicted. This has bolstered expectations of a faster-than-expected rate decrease from the Federal Reserve, with an initial cut now set for September (formerly December). This week’s data in the United States is fairly scant, but statements from Fed official Kashkari will draw some attention.
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