News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
GBP/USD Weekly Forecast: GBP Cheers Stimulus, Rally at Risk of Stalling

GBP/USD Weekly Forecast: GBP Cheers Stimulus, Rally at Risk of Stalling

Justin McQueen, Strategist

USDFUNDAMENTAL HIGHLIGHTS:

  • USD Heading Higher into May FOMC Meeting
  • Inflation and French Election the Key Risks

The near term outlook remains bullish for the US Dollar as rate differentials continue to move in favour of the greenback. Meanwhile, softer risk assets is also likely to keep the greenback underpinned and thus maintain a foothold above the 100 level.

The most recent Fed minutes provided details on what quantitative tightening will look like when it is announced at the May meeting. However, much of the limelight had been stolen by Fed’s Brainard who emphasised that this is an inflation-fighting Federal Reserve who will look to over deliver with regard to policy tightening. As such, the USD will likely continue its ascendency heading into the May meeting and even more so, now that commodity currencies have begun to pullback.

G10 FX Performance

GBP/USD Weekly Forecast: GBP Cheers Stimulus, Rally at Risk of Stalling

Looking ahead, on the domestic front we will see the latest round of inflation figures. However, with the direction of monetary policy clear for all to see with a 50bps hike alongside QT at the May meeting expected. The data is unlikely to have a notable impact for the near-term policy outlook and therefore, volatility in the dollar is likely to be muted, unless there is a significant deviation from expectations. Instead, the bigger focus may on the fallout from the first round of the French election in light of the narrowing gap between Macron and Le Pen in the polls. What was once a sure bet for a Macron victory is now looking closer to a possible upset. As such, should Le Pen perform better than the polls currently suggest in the first round, expect the Euro to come under pressure in the lead up to the second round, which could see a move to 1.07.

French Election Risk

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES