Pound erases weekly gains on Bank of England pessimism

The pound didn’t fare particularly well last week. GBP performed a U-turn midweek after poor data soured the outlook of the economy, while the Bank of England (BoE) provided little support due to its gloomy view on interest rates.

GBP/EUR had shed all of its previous gains by the end of the week thanks to poor economic data, closing on Friday at around €1.1789. GBP/USD fared worse, ending the week down -0.9% on the week’s opening levels at US$1.2886. Will the coming five days bring better news for the pound?

Pound

The pound took another hit from poor data last week, with releases further fuelling concerns that the vote for Brexit is finally having a negative impact on the economy. The Bank of England (BoE) also remained pessimistic, with the Monetary Policy Committee (MPC) due to lose its only rate hike-supporter next month as Kristin Forbes' term of appointment expires.

Euro

The threat of populism in France receded after the second round of voting in the French Presidential Election saw Emmanuel Macron triumph over Marine Le Pen. The euro started the week bullishly, although the European Central Bank (ECB) took some of the wind out of the currency’s sails midweek.

US dollar

The US dollar had a lacklustre week, with the latest shock political developments threatening to sour relations between the President and Congress even further; bad news considering Trump needs the support of his party in order to get his economic spending plans approved. Data was also lacking and will continue to be sparse this week, suggesting USD may have an underwhelming week ahead of it.

Australian dollar & New Zealand dollar

It was a rocky week for the Australian dollar and New Zealand dollar, with both experiencing significant volatility thanks to a combination of domestic and global developments. After falling to its lowest levels in nine months, AUD/GBP managed to end the week around £0.5733, while NZD/GBP recovered to £0.5326 from an 11-month low.