US Dollar batters all comers

Sterling didn’t have a good week last week, of that there is little doubt but the UK press coverage of the poor old pound is skewed by the fact that they almost exclusively measure sterling against the US dollar and the Euro. These do count for most GBP trade but they don’t show the full picture. The really big mover last week was the US dollar which strengthened across the board. Sterling’s relative lack of support allowed the GBPUSD exchange rate to drop to this morning’s $1.2275; a level we haven’t seen since May 2020. However, the EURUSD rate is down to $1.0505, a level we last saw in 2016 and there is every likelihood we will see this pair fall to fresh 20-year lows in the week ahead. The major driver is the relative hawkishness of the US Federal Reserve compared to other central banks. However, there are signs the FOMC members are losing their enthusiasm for tighter monetary policy for fear it may damage growth. Watch this space for more on that.

Sterling stymied while awaiting GDP data

After a poor performance against the US dollar last week, the pound is likely to tread water for a few days ahead of Thursday’s UK economic growth data. The GDP data for Q1 is likely to show a sustainable growth level and that may be enough to stabilise the pound for now. However, we all know the trials and tribulations of the impact Russia and sanctions are having on all economies from the excessive inflation this is inflicting on the world. So there are no foregone conclusions as far as UK GDP is concerned. The GBPEUR rate fell throughout last week but, having bottomed out at €1.1640, this pair has gained half a cent over the weekend. The week ahead is awash with inflation at both the consumer and producer level, so they will be volatility throughout the week but the big-ticket item is the GDP number.

Canadian unemployment is down to a record low 5.2%

Canada’s unemployment rate fell to a record low in April. The 5.2% level is a new low after March data showed a 5.3% unemployment level. Within the figures, there is a shift from full-time to part-time employment. full-time employment fell by 31,600 in April but that slack was picked up by 47,000 fresh part-time jobs being created. Understandably job vacancies in Canada are at a record level. The Canadian dollar remains one of the biggest gainers alongside its US counterpart, although the GBPCAD rate did find some buyers on Thursday and Friday. This pair starts the week at CAD 1.5880. There are no big-ticket items from Canada this week other than a speech by Deputy Governor of the Bank of Canada, Toni Gravelle. So the Canadian dollar’s value will take its cues from commodity markets and the US dollar due to America’s importance as Canada’s chief export market.

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