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A slightly heightened risk appetite saw the pound and the euro benefit.
Markets were a bit more upbeat to begin the week, which helped the pound and the euro gain a touch of momentum against the US dollar. GBP/USD gained around half a cent over the course of Monday, while EUR/USD also trended upwards by around 0.25%.
There was little for currency markets to get too excited about, which helped any movements stay relatively small. However, with economic releases and the European Central Bank’s interest rate decision on the schedule this week, it’s likely there will be more volatility around the corner.
The German trade surplus narrowed from €27.5bn to €21.4bn in February, a slightly bigger fall than was expected. Shipments to the EU and other exports were what tilted the scale, along with a general increase in imports.
While millions gathered to watch the solar eclipse, JPMorgan’s Jamie Dimon tried in vain to grab the attention. In his annual letter to shareholders, the high-flying executive warned that interest rates would have to stay elevated longer than many people thought to control the effect of government stimulus programmes.
The price of oil fell back from the five-week high it reached last week as Israel announced it had withdrawn troops from Khan Younis. Fellow commodity gold meanwhile reached an all-time high of over $2,350 per troy ounce on Monday.
Finally, the recently formed AUKUS pact of Australia, the UK and the US could soon have a new member. Government sources said they were considering bringing Japan into the fold to respond to the growing threat of China in the region.
Do be sure to look our for our Quarterly Forecast, which will be published next week. In the report, we’ll be taking a look at the timeline for interest rate cuts, what geopolitical uncertainty means for your budget, as well at all things nautical. Keep your eyes peeled!
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Stable for now
Sterling looks set to benefit from a slightly low key start to the week. There aren’t very many landmines leading up to Friday’s GDP numbers, but we know from experience that when markets do move, it can often prove ruinous to your next transaction.
GBP/USD: the past year
EUR: Don’t panic about trade
Germany’s trade surplus shrinking would normally have analysts jumping up and down. However, February’s fall was from a record surplus in January and it still remains well above historical averages.
GBP/EUR: the past year
USD: A tough act to follow
US inflation figures on Wednesday will be the key test for the US dollar this week, particularly after last week’s jobs data. Analysts are expecting inflation to fall slightly to 3.7%, but the spotlight will be intense, which could fuel more volatility.
EUR/USD: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your Private Client Account Manager on 020 7898 0541.
