Sterling was able to finish last week with minor advances against both the Euro and Dollar. Despite rebounding from intraday losses in the mid-North American session on Friday, Cable failed to reclaim the 1.3200 mark, “courtesy of a risk-on market mood, Fed hawkishness, and Bank of England’s rate hike, with one dissenter, perceived as a dovish increase”.
GBPUSD opened Friday at 1.3189 and closed just a few pips above, finishing at 1.3191.
Already today, GBPUSD has seen increased “selling pressure in early Tokyo, which has drifted the pair lower towards 1.3159”. Cable has “violated two-trading sessions low at 0.3156 and is eyeing more weakness ahead of the Bank of England (BoE) Governor Andrew Bailey's speech” which is due today at 12:00. Investors are hoping Bailey’s speech will give further insight into the UK central bank’s monetary policy action in May. The BoE has already increased rates by 25 basis points each time in its last three monetary policy meets, taking interest rates to 0.75%.
GBPEUR was able to reclaim the 1.20 handle on Friday. The pair opened at 1.1965 and closed at 1.2001.
The Dollar also made solid gains against the Euro on Friday, pushing the pair into the 1.09’s. EURUSD started the session at 1.1023 and closed the week off at 1.0989.
Demand for the safe-haven US Dollar has picked up due to global concerns over rising COVID-19 cases in China. Yesterday China announced its biggest city-wide lockdown since the COVID-19 outbreak began in 2020. The city of Shanghai, which has a population of over 28M people, will be locked down in two stages over nine days while government authorities carry out COVID-19 testing. The US Dollar Index (DXY) meanwhile has been able to scale above 99.00 and will likely continue to surge if the situation does not improve.
