The UK leads this week with crucial economic data releases

GBP

With no BoE interest rate decision this month, the scheduled speeches by the 3 BoE members this week (Bailey, Haskel & Ramsden) could prove to be the main market drivers. Any hint that interest rates can be cut without stoking the inflation fire, could result in a weaker Pound.

That being said, with the US seemingly no closer to cutting its interest rate, it may be, that the UK will wait until such event occurs, which will lead to a stronger Pound. Any major economy that moves before the US (who moved first in raising interest rates) is risking a currency slide.

Tomorrow, the market will be looking at the UK's labour situation as a whole, but more importantly its average earnings release. An undershoot could see GBP softer, as investors will gain confidence that wage inflation is under control and the BoE can cut interest rates in the months ahead.

On paper, Wednesday's UK inflation figures are this weeks highlight. No change is expected, so it could prove to be a non-event, but anything else will create volatility. Friday's retail sales should lift Sterling after receiving a boost from the Easter period last month.

EUR
The Euro-Zone is offering nothing of note this week and so could continue to lose value. 0.5% was lost against the Pound last week and it was a whopping 1.5% versus the US Dollar. This was down to the ECB all but confirming an interest rate cut is coming in June..

USD
It's a relatively quiet week out of the US this time round, after a busy and effective couple of weeks. A 'pullback' could be on the cards this week after gaining significant value across the board recently. The US is performing strongly and that means there is little need to cut interest rates (all things being considered; a higher interest rate generally means an economy is performing well and so has a stronger currency).

GBP v USD lost 1% last week and is down 2% over the last month. A 5-month low has come quick and spiraled down from an 8-month high just 5-weeks ago. Hence why some believe overbought territory is being realized. However, we believe cable is fairly priced now and that this year the $ has been undervalued.