As we step into the last full week of April, the currency markets are moving with caution. A mix of PMI data, US confidence numbers, and ongoing geopolitical jitters is likely to keep traders on their toes — and clients on the hunt for clarity.
GBP – Holding Firm, But At Risk
- Sterling has gained around 0.7% against the USD and 0.5% against the EUR over the past 10 days, with momentum driven by softer inflation data last week (UK CPI slowed to 2.6%).
- With markets now tentatively pricing a Bank of England rate cut as soon as August, this week’s UK retail sales (Friday) will be key to either solidifying or challenging that view.
- A weak reading could prompt sterling to give back recent gains.
🔍 Watch this week: If UK consumer data disappoints, expect downward pressure to build — especially if US data outperforms.
USD – Stuck in the Middle
- The US dollar has been broadly flat over the past week, down just 0.2% against EUR and unchanged versus GBP.
- Traders remain indecisive ahead of a critical run of US data: PMIs on Tuesday, Durable Goods on Wednesday, and Consumer Sentiment Friday.
- Markets still lean towards 2-3 Fed cuts this year, but a string of strong prints could push expectations further out.
🔍 Watch this week: Better-than-expected data could trigger a fresh round of USD buying.
EUR – Cautiously Supported
- The euro is up roughly 0.6% against the USD over the last 7 trading days, helped by hawkish commentary from certain ECB members.
- All eyes are on Tuesday’s Flash PMIs. Services activity in particular will guide the ECB’s June rate decision.
- Wage data and inflation expectations are being watched just as closely as growth right now.
🔍 Watch this week: A beat on PMIs could strengthen the euro’s footing — especially versus a rangebound dollar.
🌍 G10 Currencies Snapshot
- AUD: Rose 0.8% last week as China’s GDP surprised to the upside. Australian inflation data (24/04) is now key — a soft number may reverse gains.
- CAD: Up 0.3% vs USD, supported by firm oil prices. Retail Sales (26/04) will shape near-term sentiment.
- JPY: Fell 1.1% last week, hitting its weakest level in decades — traders now watching for potential BoJ intervention.
- CHF: Down 0.4% vs EUR, with little fresh data this week. SNB still seen as dovish after its surprise cut in March.
- NOK/SEK: Both gained 0.6–0.9%, helped by higher risk appetite and rising commodity prices.
🌐 Geopolitical Watchpoints
- Middle East: Ongoing tensions between Iran and Israel haven’t rocked markets yet — but safe-haven flows (JPY, CHF) are being watched closely.
- US-China Tech Tensions: Washington’s crackdown on AI chip exports remains a slow-burn risk to market sentiment.
- UK Politics: With local elections approaching in May, GBP may start reacting to polling and spending pledges ahead of the likely general election later this year.
💡 Did You Know?
Only 15% of FX trading is driven by trade and investment — the rest is speculative.
That means the vast majority of currency market flows are dictated by sentiment, positioning, and economic forecasts — not actual trade of goods or services. FX is as much psychology as it is policy.
