Forex News

Scotiabank strategists Shaun Osborne and Eric Theoret note that stronger-than-expected United Kingdom (UK) Retail Sales, driven largely by fuel purchases, have supported the Pound (GBP), though broader UK data still point to a softer growth outlook. Short-term GBP/USD technicals are described as neutral to bullish, with a developing base pattern and clearly defined support and upside levels that could guide near-term price action.

Pound supported by data and pattern

"UK Retail Sales rose a stronger than expected 0.7% in March, largely reflecting purchases of fuel as prices rose in response to conflict in the Middle East."

"While UK data reports this week overall have been constructive, the Bank of England’s “Decision Maker Panel” survey of UK businesses also released today points a relatively soft picture for growth ahead. However, inflation expectations continue to nudge higher (nearing 4% and the highest since late 2023)."

"Neutral/bullish—Intraday price gains in Cable suggest some upward momentum is developing after the pound formed a base (via a bullish “morning star” pattern) on the intraday chart earlier. Support is 1.3450/60. Gains through 1.3495/00 may extend to 1.3555."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

ING analysts Frantisek Taborsky and Zoltán Homolya expect central bank of the Hungary, Magyar Nemzeti Bank (MNB) to keep its base rate unchanged at 6.25% throughout 2026. They argue that ongoing geopolitical uncertainty, elevated energy prices and Hungary’s specific vulnerabilities leave no room for rate cuts. Even with some supportive market moves, they see the central bank maintaining a hawkish, wait‑and‑see stance.

MNB seen on prolonged policy hold

"The continuing high level of uncertainty surrounding the war in the Middle East suggests that the NBH will keep interest rates unchanged at 6.25%. While it is true that the economy is better placed to absorb the impact of higher energy prices than in 2022, the persistence of high levels of geopolitical uncertainty certainly limits monetary policy flexibility."

"As a starter, a rate cut is definitely out of the question for April, and this is a high-conviction call. We expect the central bank to adopt a hawkish tone in an attempt to influence FX market stability, keeping the EUR/HUF at lower levels. We expect the Bank to demonstrate maximum flexibility in order to convince market players and present an image of strength, calmness, patience and caution."

"Based on the updated baseline scenario for energy markets and major central banks, which is more pessimistic than before, we forecast that Hungarian inflation will continue to accelerate for the remainder of the year. We expect it to average 3.5% in the second quarter, rise above the tolerance band in the second half of the year and average 4.3% in the final quarter. Given that energy prices remain higher than before and due to their impact on Hungary, we currently see no scenario indicating an interest rate cut this year."

"However, if the worst-case scenario materialises, inflation would rise significantly, exceeding 6% during the third quarter. The NBH could not ignore this and would be forced to raise interest rates."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

TD Securities economists, including Julie Ioffe and colleagues, expect the Bank of England to keep Bank Rate at 3.75% in a unanimous decision, maintaining a wait-and-see stance. They highlight resilient UK GDP and labour data, stronger inflation projections due to higher energy prices, and see the MPC emphasising scenario analysis as inflation stays above target in 2026 while growth softens later.

BoE seen on prolonged policy hold

"We expect the Bank of England to remain on hold, leaving Bank Rate at 3.75% in another unanimous vote. Last meeting showed a broad desire to wait and see, which was construed as hawkish at the time, but has since been clarified by MPC members as a measured approach to monitoring how the conflict will pass through to domestic prices beyond energy."

"We also see limited changes to the statement, acknowledging that "CPI inflation will be higher in the near term" and that "the MPC is alert to increased risk ... through second-round effects"."

"All told, the projections are almost certain to point to higher inflation across Years 1 & 2, while GDP growth is a little stronger initially and a little weaker further out. Year 2 inflation is likely to now be slightly above 2% (was 1.8%), and the risk is that Year 3 inflation nudges upward a bit to above the February forecast of 2.0%."

"A big question will be whether the MPC decides to emphasise scenarios much like some other central banks have done in recent projection exercises. This is something they've put increasing emphasis on in recent MPRs, so it wouldn't surprise us to see ECB-like scenarios of more severe energy price pressures, meaning more persistently high inflation and weaker GDP growth."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Brown Brothers Harriman’s (BBH) Elias Haddad notes USD/JPY is consolidating just below 160.00 after slightly hotter March Consumer Price Index (CPI) that leaves Bank of Japan (BoJ) expectations unchanged for now. With markets pricing near certainty of no move next week, Haddad argues investors underprice the risk of a hike given Japan’s positive output gap and robust wage gains.

Market complacent on BoJ tightening risk

"USD/JPY is trading in a tight range just under key resistance at 160.00. Japan March CPI came in slightly hotter than expected but does not shift the dial on Bank of Japan (BOJ) rate hike expectations."

"Headline CPI rose to 1.5% y/y (consensus: 1.4%) vs. 1.3% in February driven by petroleum-related items. Core CPI ex. fresh food printed at 1.8% y/y (consensus: 1.7%) vs. 1.6% in February, while core CPI ex. fresh food & energy CPI matched consensus at 2.4% y/y vs. 2.5% in February."

"The Bank of Japan’s (BoJ) set of underlying CPI indicators for March will be released just ahead of Tuesday’s policy rate decision. The swaps curve price in near certainty that the BoJ holds rates steady at 0.75% next week. In our view, the market is underpricing the risk of a rate hike given Japan’s positive output gap (0.45% in Q3 2025) and solid results from the latest spring wage talks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

National Bank of Canada (NBC) analysts Ethan Currie and Taylor Schleich expect the Bank of Canada (BoC) to keep its overnight target at 2.25%, extending a fourth consecutive hold. They see policymakers reiterating that policy is appropriately calibrated, looking through the war-driven headline Consumer Price Index (CPI) spike as soft core inflation persists, while modestly downgrading Gross Domestic Product (GDP) and marking up the all-items inflation outlook.

BoC seen holding as risks diverge

"The Bank of Canada is set to leave its overnight target unchanged at 2.25%, a decision widely expected by forecasters and OIS markets. This would mark the fourth consecutive hold after policymakers first declared in October that policy is at “about the right level” to keep inflation near target and support the economy’s transition."

"Traders have stripped out the three hikes that were (briefly) priced for 2026, but a tightening bias clearly remains. We don’t expect Governing Council to explicitly endorse this, instead reiterating that policy is appropriately calibrated. They will continue to look through the war’s “immediate” impact on inflation while also assuring that they will not let higher energy prices spread or become persistent inflation."

"Despite the surge in gas prices, recent inflation data has been encouraging as underlying price pressures continue to cool. For now, soft core inflation supports looking through the headline CPI spike."

"In an updated MPR, expect the all-items inflation outlook to be marked up reflecting higher gas prices. However, revisions to core inflation projections should be minimal. The GDP growth profile is likely to be downgraded modestly with Q4:2025 performance weaker than expected, Q1:2026 tracking below earlier estimates and the labour market underwhelming. The Bank may note that risks to growth are skewed lower and risks to inflation are skewed higher."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• A large majority of economists expect the ECB to keep rates unchanged at the April meeting.
• Expectations for a rate hike in June are increasing compared to the previous survey.
• The consensus is shifting more clearly toward at least one rate hike this year.

The latest Reuters surveys highlight a gradual shift toward tighter monetary policy expectations in the Eurozone, with a more pronounced tightening bias than previously anticipated.

According to the poll, 84 out of 85 economists expect the European Central Bank (ECB) to keep its deposit rate unchanged at 2% at the April meeting, pointing to an almost unanimous consensus for a short-term hold.

However, expectations evolve for the following meetings, as 44 of the 85 economists now anticipate a rate hike to 2.25% as early as June. This marks a shift compared to late March, when 38 of 60 economists surveyed expected no change through 2026.

Beyond the immediate horizon, tightening expectations are strengthening significantly. The survey shows that 50 out of 85 economists expect at least one rate hike this year, compared to just 21 out of 60 in the previous poll. This change reflects a repositioning of the consensus toward a potentially more restrictive monetary policy stance over the medium term.

These results reflect ongoing uncertainty surrounding the inflation outlook in the Eurozone and suggest that the ECB may maintain a cautious stance in the near term, while keeping the door open to further policy adjustments should inflationary pressures persist.