IFX Market Report: Friday 23rd April 2021

The Pound struggled again on Thursday against the Euro and Dollar – marking losses against both currencies in the London session. Cable still seems unable to break through the psychologically-important 1.40 handle on a consistent basis, even though a rebound in international stock markets and ongoing weakness in the safe-haven US Dollar suggest that investors are broadly positive about the global economic outlook and the markets. One analyst has claimed that “the problem for Sterling is that record coronavirus infections in India and more restrictions in Japan are pointing to a note of caution that can be seen in particular in the crude oil market, where concerns remain about weakening demand for fuel, and it may be that this caution is also holding back GBP/USD”.

In regard to the European Central Bank’s latest interest rate decision, as widely anticipated the ECB left monetary policy settings unchanged with the accompanying statement essentially a copy and paste from the prior month. Christine Lagarde reiterated that the central bank will operate PEPP purchases at a significantly higher pace over the current quarter, while the PEPP will continue until at least the end of March 2022. In reaction to this unanimously expected action and statement, EUR/USD and bund yields were unchanged.

After starting the day on a relatively positive note at 1.3933, GBPUSD quickly slipped below the 1.39 handle, closing the session at 1.3845.

GBPEUR also made losses on the day. The pair opened at 1.1578 and closed at 1.1516.

EURUSD was once again rangebound with the ECB giving the pair little direction. The pair started Thursday at 1.2034 and closed at 1.2022.