Good afternoon,

Inflation data published yesterday morning by the Office for National Statistics showed that YoY CPI rose to 1.1% in March from 0.9% in February. As the data was very much in line with expectation, sterling showed little interest in taking support to retest the 1.40 level. Nevertheless, GBPUSD did manage to pull itself back above the 1.39 mark having briefly dropped down to the 1.38 level earlier in the day, with Boris Johnsons warning of another wave of coronavirus after the summer weighed on the pound.

Across the pond, USD seems to be enjoying a return of risk appetite, giving up some of the safe haven flow we have recently been seeing. With US economic growth coming back to market and fears of another wave of coronavirus subsiding, we may see some further risk on activity, causing a dollar sell off.

EURUSD reflected this perfectly with the market very briefly losing the significant 1.20 level, only to reclaim this later in the day. Nevertheless, today looks to be key on the data front with US employment figures and the ECB meeting. No change in policy is expected from the ECB but Christine Lagarde’s press conference will be closely watched as to what the forward guidance will be around the monetary policy. Unemployment claims for the US are forecast to be pricing at 607k against a previous of 576k.

Outside of the above, the shift will then move to the European flash manufacturing and services PMI figures on Friday, with next week’s FOMC meeting for the Federal Reserve also in focus.

Have a great day.

Author: Joshua Nagenthiran, Senior Relationship Manager

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