What was expected to be a quiet first couple of days in April for market data, has proved to be one of the most impressive weeks for the Pound in a long time. The week started off strong for the Sterling, with the UK economic figures showing growth in the final quarter of 2023. This was a far cry from the doom and gloom that many forecasters predicted. The UK growth figures, coupled with an increase in oil prices, lent to higher levels of inflation rates. This may support the need for further interest hikes within the UK, and whilst it holds its hawkish stance, and another possible 25bps hike looking likely in May. The pound has found support, allowing some of the last 6 months’ lost ground to be regained. As we all know, the last couple of weeks will have highlighted the need for caution surrounding interest rate hikes, for all of the Central banks, especially the Federal Reserve. As the Federal Reserve has already felt the sting from their hike policy, with the collapse of major bank SVB, many economists know how carefully the FED will now have to tread, to not further break parts of the economy. Many economists believe a report showing anything below a 250k on the payrolls report, will likely indicate a 25bps hike or potential pause could be on the cards; concerns of a slowing trajectory have caused the greenback to retreat. The payrolls data today will be in the spotlight as it is expected to set the tone for future FED policymaking. Should we see a slowdown in the US labour market, we can again expect to see the trajectory be shortened and expect further gains to be made for the Sterling versus US Dollar, and a retracement of some, if not most, of the losses the Pound took from last year.

On Tuesday, the Pound rallied versus the US Dollar, and touched 10-month highs recovering over 4% since the start of January, with positive outlooks to 2023 as a whole. The currency is the best-performing major currency in the world, and the UK’s improved current account position has helped to reduce short-term worry, showing how resilient our economy can be.

Against the Euro, we also saw gains this week, seeing quarterly highs from the positive news stated earlier in the article. Following the failure of 166-year-old Credit Suisse rocking the Eurozone’s confidence, the Sterling has seen support as the UK’s banking sector has been viewed as stable by most economists, bolstering confidence it has gotten.

With the pound performing tremendously well in a very short week, we can certainly expect further volatility as we further wade into a forever-changing landscape that is global economics.