GBP/USD trades to a multi month high of 1.6149 on Friday''s strong retail sales print
United States Dollar: A much stronger than expected UK retail sales figure sent cable shooting through well documented resistance around the 1.6100 level on the way to a multi month high of 1.6149 on Friday. Retail sales were shown to have increased by 1.8% in March, a consequence of the unseasonably warm weather prompting consumers to reach into their pockets. The number came in at its highest level since January 2011, also helped in no small part by the fuel strike that never was, which pushed car fuel sales up by 5% as concerned motorists hit the petrol pumps in their droves. There were no economic releases from the US on Friday, leaving the market to focus on the ongoing IMF and G20 meetings but better than expected economic data released elsewhere, including UK retail sales and German IFO, meant that risk appetite was well supported and subsequently the greenback was pushed lower against most of its major counterparts. Friday capped off five consecutive days of gains for GBP/USD, and it could be a choppy week ahead for the pair with Q1 GDP releases from both the UK and US due in the days ahead. GBP/USD opens this morning at 1.6090 following some mild profit taking in Asian trade.
We expect a range today in the GBP/USD rate of 1.6040 to 1.6120
Euro: The single currency was boosted against both the GBP and USD by a strong German IFO number on Friday. Given the ongoing and well publicised troubles facing the economies of peripheral Europe, it was important that this business sentiment index from the Eurozone engine room came in firm and so a 9 month high in the release was well received by euro bulls. The common currency also benefitted from investor optimism that the second day of the IMF meeting in Washington would bring a renewed vigour amongst members to agree a larger funding package to help in the event of a sovereign default. The latter was especially pertinent on a day where Spanish 10-year bond yields briefly traded above the all-important 6% level - a strong sign that the market is still uncomfortable with the Iberian nation''s financial predicament. This week there will be a lot of attention paid to the Eurozone PMI reports that are due for release and we expect continued focus on political risk as the French elections continue. GBP/EUR opens this morning at 1.2235.
We expect a range today in the GBP/EUR rate of 1.2190 to 1.2240
Aussie and Kiwi Dollars: AUD/USD and NZD/USD were boosted on Friday by improved global risk sentiment and traded to highs of 1.0385 and .8190 respectively. Both commodity currencies have been sold early on this week however as some political uncertainty in Holland and France starts to weigh a bit on risk. Australian data released overnight also showed that the country’s producer price index fell by 0.3% in the March quarter vs. expectations for a rise of 0.5%. It means expectations are now gathering pace for an imminent RBA rate cut and so Australian CPI will be an important print later tonight. Meanwhile HSBC flash Chinese PMI released early this morning has also indicated that industrial activity in China is stabilising. The April index printed at 49.1, still below the 50 level which is most often associated with a contraction in activity. As such both AUD/USD and NZD/USD open at 1.0315 and .8130 whilst GBP/AUD and GBP/NZD are slightly higher at 1.5605 and 1.9800.
We expect a range today in the GBP/AUD rate of 1.5550 to 1.5640
We expect a range today in the GBP/NZD rate of 1.9740 to 1.9860
EUR: No data due for release
GBP: No data due for release
NZD: Credit card spending
USD: No data due for release
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