Forex News
Commerzbank analysts describe India’s growth backdrop as solid, with GDP expected around 6.5% in fiscal 2026–2027, supported by domestic demand, GST 2.0 reforms, and investment-friendly budgets. However, they stress downside risks from higher Oil prices, El Niño-related agricultural weakness, and external headwinds, even as fiscal consolidation and diversified energy imports help mitigate vulnerabilities.
Domestic demand offsets external headwinds
"Domestic demand is expected to be the primary driver, aided by firmer private consumption from higher wages and the GST2.0 reform."
"Furthermore, public and private domestic investments should continue to benefit from the supportive 2026-2027 Union Budget and the cumulative effects of the prior monetary easing."
"It [Government] is targeting a slightly lower budget deficit of 4.4% of GDP for the current fiscal year 2026-2027 vs 4.5% for the previous fiscal year."
"Earlier this year, the government projected a current account deficit of 1% of GDP for FY2025-2026"
"but this could climb to 2% given higher oil prices. India imports around 87% of its crude oil consumption and 46% of this comes from the Middle East, compared to over 60% before 2022."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- EUR/USD rises as the US Dollar weakens amid possible Japanese FX intervention.
- Technically, EUR/USD holds above the 200-day SMA on the daily chart, keeping a mild bullish bias.
- The pair struggles below the 50% Fibonacci retracement at 1.1747.
The Euro (EUR) edges higher against the US Dollar (USD) on Thursday as the Greenback softens broadly following possible intervention from Tokyo, with authorities seen selling Dollars to support the Japanese Yen (JPY), while the Euro also draws some support from the latest monetary policy decision by the European Central Bank (ECB).
At the time of writing, EUR/USD is trading around 1.1726, up nearly 0.42%. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.16, down about 0.80% on the day.
The European Central Bank left all three key interest rates unchanged, in line with expectations. The bank said the Middle East conflict is pushing energy prices higher, lifting inflation while weighing on growth. Policymakers reiterated that they will closely monitor incoming data and maintain a data-dependent approach, while remaining committed to ensuring inflation stabilizes at the 2% target in the medium term.
Earlier in the day, preliminary data showed that the Harmonized Index of Consumer Prices (HICP) rose 3% YoY in April, accelerating from 2.6% in March and marking the highest level since September 2023, largely driven by energy prices.
ECB President Christine Lagarde said a rate hike was discussed extensively and the decision to hold was unanimous. Markets are pricing in two to three rate hikes this year, though traders remain cautious about whether the central bank can hike aggressively given the Eurozone’s exposure to energy shocks.
Technical Analysis:
In the daily chart, EUR/USD holds above the 200-day Simple Moving Average (SMA) at 1.1676, keeping a mild bullish bias while it consolidates just under the 50.0% Fibonacci retracement at 1.1747 of the move from the January high to the March low. The Relative Strength Index (14) at 54.4 leans slightly positive without signalling overbought conditions, whereas the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, hinting that upside momentum is losing some traction as the broader trend strength, reflected by an Average Directional Index (ADX) near 22.2, remains modest.
On the topside, immediate resistance is located at the 50.0% Fibonacci retracement at 1.1747; a sustained break higher would open the door toward the 38.2% retracement at 1.1826, followed by the 23.6% level at 1.1924. On the downside, initial support is seen at the 200-day SMA at 1.1676, closely backed by the 61.8% Fibonacci level at 1.1667, while deeper losses would expose the 78.6% retracement at 1.1555 ahead of the 100.0% Fibonacci anchor near 1.1411.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on April 30 at 18:33 GMT to say, in the first paragraph, that the EUR edges higher against the USD on Thursday, not Tuesday.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.45% | -0.87% | -2.53% | -0.62% | -1.05% | -1.19% | -1.24% | |
| EUR | 0.45% | -0.39% | -2.11% | -0.18% | -0.58% | -0.72% | -0.77% | |
| GBP | 0.87% | 0.39% | -1.70% | 0.21% | -0.19% | -0.33% | -0.39% | |
| JPY | 2.53% | 2.11% | 1.70% | 1.96% | 1.54% | 1.34% | 1.31% | |
| CAD | 0.62% | 0.18% | -0.21% | -1.96% | -0.44% | -0.59% | -0.62% | |
| AUD | 1.05% | 0.58% | 0.19% | -1.54% | 0.44% | -0.14% | -0.17% | |
| NZD | 1.19% | 0.72% | 0.33% | -1.34% | 0.59% | 0.14% | -0.05% | |
| CHF | 1.24% | 0.77% | 0.39% | -1.31% | 0.62% | 0.17% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- GBP/USD clears trendline resistance, shifting bias toward bullish continuation.
- RSI above 60 confirms strong upside momentum and buyer control.
- Break above 1.3600 exposes 1.3711 and 1.3800 resistance levels.
The GBP/USD pair advances by some 0.78% on Thursday as market participants continue to price in further tightening by the Bank of England (BoE), even though it kept rates steady earlier in the day. At the time of writing, the pair trades at 1.3581 as a technical ‘bullish engulfing’ chart pattern looms.
GBP/USD Price Forecast: Technical outlook
From a technical perspective, GBP/USD is neutral but tilted to the upside as the pair clears a key resistance trendline around 1.3560/65, clearing the way towards 1.3600. Momentum, as depicted by the Relative Strength Index (RSI), jumped sharply past the 60 reading, an indication that bulls are in charge.
If GBP/USD clears the 1.3600 handle and confirms a ‘bullish engulfing’ chart pattern, it opens the door for challenging the February 11 daily high at 1.3711. Once breached, the next area of interest would be the psychological 1.3800 figure.
Conversely, a sudden reversal near the April 29 daily high of 1.3528 opens the door for a drop to 1.3500. A decisive break will expose the confluence of the 100- and 20-day SMAs at 1.3468/67, followed by the April 23 low of 1.3448.
GBP/USD Price Chart – Daily
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.26% | -0.54% | -1.91% | -0.53% | -0.74% | -0.45% | -0.60% | |
| EUR | 0.26% | -0.25% | -1.74% | -0.24% | -0.45% | -0.16% | -0.32% | |
| GBP | 0.54% | 0.25% | -1.44% | 0.01% | -0.21% | 0.09% | -0.07% | |
| JPY | 1.91% | 1.74% | 1.44% | 1.47% | 1.24% | 1.62% | 1.44% | |
| CAD | 0.53% | 0.24% | -0.01% | -1.47% | -0.17% | 0.15% | -0.08% | |
| AUD | 0.74% | 0.45% | 0.21% | -1.24% | 0.17% | 0.30% | 0.14% | |
| NZD | 0.45% | 0.16% | -0.09% | -1.62% | -0.15% | -0.30% | -0.16% | |
| CHF | 0.60% | 0.32% | 0.07% | -1.44% | 0.08% | -0.14% | 0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Standard Chartered strategists discuss how United Kingdom (UK) local elections on 7 May could intensify political pressure on Prime Minister Starmer and potentially trigger a Labour leadership challenge. They note that Labour may suffer heavy council losses and that Starmer could respond with a cabinet reshuffle and closer European Union (EU) ties. Any successor’s fiscal stance would be scrutinized via Gilt yields.
Local elections, Labour risks and Gilts
"Local elections on 7 May covering over 5,000 council seats across England and all seats in the Scottish and Welsh parliaments will prove a key test for Prime Minister Starmer’s government."
"While Labour currently holds around half of all council seats up for election, the party’s declining poll rating means it could face unprecedented losses."
"There could be increased pressure from the cabinet for Starmer to resign and there is a growing risk of a leadership challenge."
"He will likely attempt a political and policy reset following the elections, with a cabinet reshuffle and a reorientation of policy towards closer ties with the EU and boosting growth."
"However, all potential candidates would be aware of the need to offer a fiscally sustainable policy platform, given that Gilt yields would act as a barometer of how financial markets judge each potential successor’s economic credibility."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- WTI Oil corrects after three consecutive days of gains while holding above the $100 level.
- Tensions around the Strait of Hormuz continue to fuel global supply concerns.
- US efforts to reopen the maritime route remain limited and uncertain.
West Texas Intermediate (WTI) declines on Thursday, trading around $101.45 at the time of writing, down 3.70% on the day after three consecutive days of gains. Despite this technical pullback, US Crude remains above the psychological $100 level, reflecting a market that is still under strain.
The corrective move comes in a context where geopolitical risks remain elevated. According to the Associated Press, US President Donald Trump is exploring options to end the shutdown of the Strait of Hormuz, a strategic chokepoint for global energy transport. However, the proposed plan does not include lifting the US naval blockade on Iranian ports, focusing instead on coordinating with allies to increase pressure on Iran.
These developments are maintaining a strong risk premium in Oil prices. The Strait of Hormuz is a critical corridor for Middle Eastern Crude exports, and any prolonged disruption continues to raise fears of supply shortages in global markets.
Analysts at Danske Bank note that tensions linked to the Iran conflict continue to support energy prices. The bank highlights that markets remain skeptical about a swift normalization of maritime traffic in the region.
In this environment, elevated energy prices continue to weigh on broader market sentiment, fueling inflationary pressures and influencing dynamics across currency and Equity markets. Even though today’s decline reflects profit-taking, the Oil market balance remains dominated by geopolitical uncertainty and supply disruption risks.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- DJIA jumped roughly 1.5% as a strong Caterpillar print lifted industrial names.
- US Q1 Gross Domestic Product came in below estimates at 2% annualized, while Core PCE held steady at 3.2% YoY.
- Initial Jobless Claims dropped sharply to 189K, well below the 215K consensus.
- Meta and Microsoft weighed on the Nasdaq and S&P 500 on rising AI capex concerns.
The Dow Jones Industrial Average climbed sharply on Thursday, adding about 730 points, or 1.5%, after rallying from an overnight low below 48,500 to a session high just above 49,600. The S&P 500 added roughly 0.5%, while the tech-heavy Nasdaq Composite eked out a 0.2% gain as mega-cap tech weakness capped broader index performance. The split tape underscored a clear divide between old-economy industrials and AI-exposed technology names.
Caterpillar lifts the blue chips
Caterpillar (CAT) shares jumped about 10% after the heavy machinery maker delivered a stronger-than-expected quarterly print and raised its annual revenue outlook. The industrial bellwether's results offered a measure of reassurance about global demand and were the single largest contributor to the Dow's outsized gain. Several other industrial names tracked higher in sympathy, helping the index outpace its peers by a wide margin.
Mega-cap tech weighs on the Nasdaq
Meta (META) tumbled roughly 9% as the company lifted its capital expenditure guidance and posted softer user growth, fanning concerns that AI spending is running ahead of monetization. Microsoft (MSFT) shed about 5% after flagging that capex would reach $190 billion this year, partly driven by elevated memory costs. The two names alone shaved meaningful points off both the Nasdaq and S&P 500, leaving the broader tech complex on the back foot.
GDP misses while inflation holds firm
Q1 Gross Domestic Product (GDP) printed at 2% annualized in the 12:30 GMT release, below the 2.3% consensus though up from 0.5% in Q4 2025. Personal Consumption Expenditures (PCE) Price Index data for March came in line with expectations, with headline PCE at 3.5% YoY and Core PCE at 3.2% YoY, both slightly hotter than the prior month. Initial Jobless Claims surprised to the downside at 189K, well below the 215K consensus and pointing to a still-resilient labor market. The Employment Cost Index (ECI) ticked up to 0.9% in Q1, while Chicago Purchasing Managers Index (PMI) slipped to 49.2 in April, dropping back into contraction.
Oil reverses lower on profit-taking
West Texas Intermediate (WTI) Oil futures fell about 2% to trade above $104 a barrel, while Brent crude shed roughly 3% to trade above $114. The pullback followed a sharp Wednesday rally driven by reports that the White House had instructed officials to prepare for an extended blockade of Iran. Energy traders remain on alert for further escalation in the Strait of Hormuz, though Thursday's session leaned toward profit-taking after the prior day's surge.
Fed aftermath colours rate-cut bets
Markets continued to digest Wednesday's Federal Reserve (Fed) decision to hold rates steady at 3.5% to 3.75%, with the 8-4 vote marking the largest dissent since 1992. With incoming Chair Kevin Warsh in the dovish minority, traders are recalibrating expectations for further cuts later this year.
Dow Jones 5-minute chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- USD/CAD falls as the US Dollar weakens amid possible Japanese FX intervention.
- US GDP rose 2% QoQ annualized in Q1, according to a preliminary estimate, while Canada’s GDP grew 0.2% MoM in February.
- US-Iran tensions remain elevated, keeping Oil prices supported amid concerns over prolonged supply disruptions.
USD/CAD trades on the back foot on Thursday as renewed weakness in the US Dollar (USD) supports the Canadian Dollar (CAD), while the latest US economic data fails to provide support to the Greenback. At the time of writing, the pair is trading around 1.3612, down nearly 0.53% on the day.
The US Dollar is under pressure amid possible FX intervention by Japanese authorities to curb sustained weakness in the Japanese Yen (JPY). Reuters, citing Nikkei, which quoted a government source, said Japan may have intervened by buying the Yen and selling the US Dollar. However, there has been no official confirmation so far.
The move follows a sharp drop in USD/JPY, which fell more than 2% after testing the 160 level, a threshold where Japan has acted in the past. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.16, down about 0.80% on the day.
On the data front, the US economy expanded at an annualized rate of 2% in the first quarter of 2026, rebounding from 0.5% in the previous quarter but falling short of market expectations of 2.3%, according to a preliminary estimate.
Inflation data showed mixed signals, with the Personal Consumption Expenditure (PCE) price index rising 0.7% MoM in March, accelerating from 0.4% in February and marking the strongest gain since June 2022. Meanwhile, the core PCE index, the Federal Reserve’s (Fed) preferred inflation gauge, increased by 0.3% MoM, easing slightly from 0.4% in February and coming in line with forecasts.
In Canada, Gross Domestic Product (GDP) rose 0.2% MoM in February, matching market expectations and improving from January’s 0.1%. According to the National Bank of Canada’s report, the growth was supported by a rebound in manufacturing output, while overall activity suggests the economy is holding up, with first-quarter GDP tracking around a 1.7% annualized pace despite ongoing headwinds, including US tariffs, uncertainty surrounding the renewal of the CUSMA trade agreement, and geopolitical tensions in the Middle East.
On the geopolitical front, tensions between the United States and Iran remain elevated, with no clear signs of a resolution. US President Donald Trump said the United States will continue its naval blockade of Iran until a nuclear deal is reached with Tehran. He is also reportedly considering a plan to reopen the Strait of Hormuz in coordination with allies to safeguard energy flows while maintaining pressure on Iranian ports.
Looking ahead, traders will closely monitor developments in US-Iran tensions, particularly any progress toward reopening the Strait of Hormuz. The situation continues to keep Oil prices elevated, providing underlying support to the commodity-linked Canadian Dollar.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
The Bank of England (BoE) kept rates unchanged at 3.75%, but unlike a passive pause, this was framed as a deliberate and active policy choice.
The decision itself was widely expected, but the 8–1 vote split, with one member pushing for a rate hike (Huw Pill), immediately signalled a more hawkish tilt beneath the surface. Policymakers are clearly becoming more concerned about the inflation outlook, particularly as higher energy prices begin to feed through the economy.
Governor Andrew Bailey made it clear that the current environment presents a difficult trade-off. Indeed, monetary policy cannot prevent the initial impact of higher global energy prices, but it must ensure that these shocks do not become embedded in wages and broader price-setting behaviour.
Furthermore, that risk of second-round effects was at the heart of the message. While still uncertain, Bailey stressed that waiting for definitive evidence would be a mistake, effectively signalling that the central bank is prepared to act pre-emptively if needed.
At the same time, the BoE is not rushing into further tightening. Instead, it is using its current stance, and crucially, the decision not to cut rates as previously expected, as a way to lean against inflation pressures. In that sense, policy is already doing more work than the headline decision might suggest.
The outlook, however, remains highly dependent on energy prices, particularly in light of the ongoing crisis in the Middle East. The longer the current shock persists, the greater the risk to both inflation and growth, leaving policymakers navigating a narrow and uncertain path.
All in all
This was not a dovish pause. The BoE is actively holding its ground, pushing back against rate cut expectations and keeping the option of further tightening alive if inflation pressures broaden.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
- EUR/GBP retreats as both central banks hold rates unchanged as expected.
- ECB hike discussions and sticky inflation keep Eurozone tightening risks alive.
- BoE split vote supports Sterling, despite Bailey pushing back on markets.
The EUR/GBP pair falls some 0.16% on Thursday as the central bank bonanza ends with the European Central Bank (ECB) and the Bank of England (BoE) keeping interest rates unchanged as expected. The cross-pair trades at around 0.8644 after reaching a daily high of 0.8670.
Sterling edges up as BoE split offsets ECB's hawkish rate signals
The European Central Bank kept the Deposit Rate at 2%, even though the Harmonized Index of Consumer Prices (HICP) in April rose from 2.6% to 3%, Eurostat reported. ECB President Christine Lagarde said the decision to hold rates was unanimous, but there were discussions “at length” to raise rates amid rising energy prices due to Iran’s war.
She hinted that the ECB will assess the economic situation and warned that a stagflationary scenario lurks. Meanwhile, money markets are pricing in nearly three 25 basis points rate hikes by the Lagarde and Co. for the rest of the year.
The Eurozone economy grew modestly in Q1, rising 0.1% QoQ, below estimates for a 0.2% expansion.
In the UK, the Bank of England followed suit, keeping rates steady at 3.75% as expected, on an 8-1 vote split, with the Chief Economist, Huw Pill, voting for a rate hike.
BoE Governor Andrew Bailey commented that the central bank faces a “difficult judgment call” on whether to adjust rates proactively or wait for evidence of a sustained rise in inflation. However, he pushed back against the swaps market, which was pricing in two rate hikes.
At the beginning of April, Bailey pushed back against investors who were pricing in further BoE tightening. The BoE’s meeting minutes revealed that some policymakers “might prefer to act early” before inflation becomes persistent.
Up next, the Eurozone docket is absent, while in the UK, traders will eye BoE’s Chief Economist Huw Pill’s speech.
EUR/GBP Price Forecast: Technical outlook
In the daily chart, EUR/GBP trades at 0.8637, extending a bearish bias as spot remains capped beneath the cluster of simple moving averages around 0.8686 and below the descending trend-line break level at 0.8704. The latest 14-day Relative Strength Index at 34.7 hovers just above oversold territory, hinting that while bearish momentum persists, downside pressure may be losing some intensity.
On the topside, initial resistance is located at the triple simple moving average area near 0.8686, with a further barrier at the former trend-line break level around 0.8704, which should act as a notable cap while the pair trades below it. A daily close above these successive hurdles would be needed to ease the current downward pressure and open the way for a more sustained recovery phase.
(The technical analysis of this story was written with the help of an AI tool.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- The Australian Dollar gains traction after China's PMI data signaled that the economy remained resilient in April.
- US Initial Jobless Claims reached their lowest point in almost 60 years at around 189K.
- The RBA will meet on May 5, with expectations of a potential third rate hike.
The AUD/USD recovers toward the 0.7190 price region on Thursday, erasing Wednesday's losses, as the Australian Dollar (AUD) benefits from data showing a resilient Chinese economy and a weaker US Dollar (USD).
The April Chinese NBS Manufacturing Purchasing Managers Index (PMI) rose to 50.3, higher than the expected 50.1, while the RatingDog manufacturing PMI also beat forecasts. The NBS non-Manufacturing PMI came below expectations, at 49.4, down from the forecasted 49.9. This better-than-expected data boosts the Aussie as China is one of Australia’s top trading partners.
In the United States (US), Initial Jobless Claims dropped to 189K, the lowest in almost 60 years, contrary to expectations of remaining stable at around 215K. Additionally, the PCE Price Index, the Fed’s preferred inflation measure, rose to 3.5% year over year in March from 2.8% in February, aligning with market forecasts.
Despite these positive job figures, preliminary Q1 GDP growth came in at 2%, below the expected 2.3%, which tempered investor enthusiasm over the USD.
The Reserve Bank of Australia (RBA) will have its next meeting on May 5. Investors expect the RBA to potentially hike interest rates for a third consecutive time amid persistently high inflation.
Short-term technical analysis:
On the four-hour chart, AUD/USD trades at 0.7183, holding a modest bullish bias as it stays above the 20-period and 100-period Simple Moving Averages (SMAs) at 0.7163 and 0.7134, respectively. The Relative Strength Index (RSI) hovers near 59, hinting at firm but not overstretched buying pressure as the pair edges toward nearby overhead barriers.
On the topside, immediate resistance appears at 0.7184, followed by a more significant cap near 0.7192, where prior supply is likely to re-emerge. On the downside, initial support is seen at 0.7167, backed by the short-term 20-period SMA around 0.7163, while deeper demand aligns at 0.7145 and the broader trend floor from the 100-period SMA near 0.7134.
(The technical analysis of this story was written with the help of an AI tool.)
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