GBP EUR USD

• GBP vulnerable due to lack of data

• EUR benefits from better than expected Retail Sales data, but vulnerable ahead of ECB rate decision

• USD reacts positively to strong NFP print on Friday, volatility expected as inflation figures released Wednesday and Thursday of this week

GBP

Sterling lost ground against both the EUR and USD on Friday as the lack of UK economic data meant the British currency had to surrender to gains from its counter parts.

Similarly, GBP remains vulnerable at the start of the week with no market moving data from the UK. Market focus will centre around GBP on Friday as the latest UK GDP figures are released alongside Industrial and Manufacturing Production.

Investors will be looking for UK data to surpass market expectations to bid GBP higher, otherwise, GBP will weaken and play into the narrative that the Bank of England rate cutting cycle will begin in June.

EUR

The Euro rallied against sterling on Friday and has rallied four consecutive days against the US Dollar.

Friday’s move higher can be attributed to a better than expected Retail Sales print. The data showed Retail Sales decreased 0.7% in February which on the face of the data is negative, however, the EUR was boosted by the data being better than expectations of a 1.3% decrease.

Market focus for the EUR will centre around the interest rate decision on Thursday where rates are expected to remain unchanged at 4%. Markets currently expect a cut from the ECB as early as June, a confirmation that a cut will take place in June will weigh on the EUR whereas, any news that the first cut may be later than June will provide the EUR a boost.

USD

The U.S. Dollar gained on Friday as better than expected Non-farm payrolls data provided a boost to the USD.

The data showed the US added 303,000 jobs in March, beating estimates of 200,000.

The increase in added jobs has supported the USD as markets believe this may cause the Federal Reserve to delay their first rate cut until September, having been priced at July prior to the Non-Farms data.

Despite the initial gains, the dollar later retraced against sterling - a suggestion that many market participants are not buying the narrative that the Fed will hike in September, instead eyeing a July date.

Focus will shift to headline inflation data which is due on Wednesday with markets expecting an increase to 3.4% to 3.2%, a move that would provide the dollar a boost. This will be followed by the Federal Reserve’s preferred measure of inflation PCE inflation on Thursday.

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