Spring is in the air with sunnier skies, higher temperatures and happier dispositions on the horizon. Much like the weather, conditions in some of the major currency markets are looking at some brighter prospects on the way for them too this season.
The release of March data and publications in the UK, Canada and Europe in mid-April kicked up the dust on some of the currencies after a period of extended calm. We look at the impact of these releases in more detail below.
After struggling against frosty Euro currency conditions in March, the GBP/EUR exchange rate blossomed by over 3% this Spring. From its March 3rd low of 1.1168, it was seen reaching a three-month high on April 17th of 1.1579 with CurrencyFair. Another Sterling cross basking in the sunshine was the GBP/CHF exchange rate, reaching a three-month high of 1.38 on April 18th with CurrencyFair.
How did Sterling manage to achieve this growth spurt?
There were two major factors behind Sterling’s recent growth spurt: the Bank of England (BoE) has been rumoured to be raising its key interest rate next month, while Brexit was also experiencing a quieter than usual few weeks out of the headlines. This however appeared to have been the calm before the storm, as Brexit resumed headline billing on Wednesday 18th April. The House of Lords, by a record majority vote, backed an amendment to the UK withdrawal bill – essentially installing the provision that the UK government must report on steps it has taken to form a customs union. The unexpected vote caused Sterling to lose confidence against the Euro after its recent surge, falling by over 1% from 1.1555 to 1.142 the day after the vote, with CurrencyFair.
The GBP/USD exchange rate also saw signs of growth this month. The rate recorded its highest level in a month, being available at 1.4348 on April 17th with CurrencyFair. Geopolitical fears surrounding President Trump’s tweeted threats and actions allowed Sterling to gain ground on the US Dollar in April, until the lowest UK inflation rate in a year saw the GBP/USD exchange rate do an about-face to be available down at 1.4212 on April 19th with CurrencyFair
Turning to Europe, the April 12th publication of the European Central Bank (ECB) meeting minutes outlined how, “volatility in the exchange rate of the euro continued to be a source of uncertainty, which required monitoring with regard to its possible implications for the medium-term inflation outlook.” This saw the EUR/GBP exchange rate drop by over 3% to a three-month low of 0.8642 on April 14th from a March 8th high of 0.8934.
The release of ECB inflation data for the eurozone on April 18th saw inflation at 1.3% – short of the hoped for 2% which would have meant an end to the quantitative easing put in place in 2014.
With the South African Rand experiencing warmer trading conditions than normal due to positive data from the International Monetary Fund (IMF), the EUR/ZAR exchange rate waned by almost 1.5% from an April 11th high of 14.900 with CurrencyFair to 14.688 on April 19th.
One currency path where the Euro is flourishing is the EUR/SEK exchange rate – it reached a three-month high of 10.418 on April 16th, rising by over 6% from its January 27th low of 9.738. This could be attributed to less than positive reports from Riksbank and Statistics Sweden – which saw inflation at 1.5%, below the predicted 1.8%.
We will continue to monitor and report on the latest movements of the currency markets next month.
Important Dates for your diary:
Tues April 24th – AUD Consumer Prices Index (YoY)
Tues April 24th – USD Consumer Confidence Index April
Thurs April 26th – EUR European Central Bank (ECB) Rate Decision.
Thurs April 26th – Governing Council of the ECB: monetary policy meeting in Frankfurt.
Friday Apr 27th – GDP Gross Domestic Product (YoY) results.
The news and information contained herein is not investment advice. We intend to merely bring together and collate the latest views and news pertaining to the currency markets – subsequent decision making is done so independently of CurrencyFair and this communication. All quoted exchange rates are indicative. We cannot guarantee 100% accuracy owing to the highly volatile and liquid nature of this currency markets and rates are not guaranteed.