Gentium FX | Daily Report - 25th April 2023 - No Domestic Drivers

GBP: The upcoming week in the UK appears to be devoid of significant data, and the market has already accounted for a 25-basis point rate increase by the Bank of England within the next two weeks. While the market might be overestimating the total amount of tightening, which will likely reach 71 basis points, including next week's increase, before the peak is reached, the pound's strength may persist unless the BoE explicitly signals otherwise during the policy meeting.

EUR: As there are no significant data releases scheduled from the Euro area, statements made by European Central Bank (ECB) officials could potentially influence the pair's behaviour. Despite the global situation not necessarily supporting a stronger EUR/USD, the prevailing momentum in the foreign exchange market is drawing investors towards European currencies and away from the US dollar.

USD: After a sell-off during Monday's American session, the US Dollar (USD) is attempting to stabilize early on Tuesday. The US Dollar Index has bounced back from its 10-day low of 101.20, which was reached during the early Asian session. Later in the day, the US economic docket will feature several indicators, including the February Housing Price Index, March New Home Sales, and the Conference Board's Consumer Confidence Index for April. Although a 25bp hike by the Fed next week is unlikely, future Fed rate expectations have been volatile, leaving ample room for speculation on Fed Chair Jerome Powell's tone regarding future guidance. In the event of fresh instability in US banking stocks, dovish Fed bets could gain momentum, causing the dollar to remain weak, while European currencies supported by hawkish central banks and with moderate sensitivity to market sentiment - such as CHF, EUR, and GBP - could benefit. Despite its safe-haven status, the Dollar may remain on the back foot in this scenario.?

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