Data and Carney Pushed the Pound-US Dollar Lower Last Week



British pound gave up recent gains

The British pound (FXB) depreciated 1.7% against the US Dollar (UUP) for the week ending April 20. The pound (GBB) closed the week ending April 20 at 1.40—compared to a close of 1.42 for the week ending April 13. Softer-than-expected retail sales, wage growth, and consumer prices dented investors’ confidence. Bank of England Governor Mark Carney gave a hint that the interest rates don’t need to be increased in May. Carney’s comments, weak data, and the strong US dollar led to the pound’s sharp depreciation the previous week.

British equity markets (BWX) had a positive close for the fourth consecutive week due to a rebound in the risk appetite. The FTSE 100 Index (EWU) rose 2.4% for the week ending April 20 and closed at 7,264.56.

Speculators increased the bullish positions

According to the latest Commitment of Traders report released on April 20 by the Chicago Futures Trading Commission, speculators increased their overall bullish positions by 4,686 contracts in the previous week. The total outstanding net long contracts increased from 43,016 contracts to 47,702 contracts as on April 17. We can expect some paring of long positions. The rate hike hopes for May have been squashed since Carney’s comments.

British pound this week

This week, the United Kingdom’s economic calendar only has one major data release. The 1Q18 GDP data are scheduled to be released on Friday. Before the release, the British pound will likely maintain the negative momentum from the previous week. The US dollar and the euro’s price action could impact the pound-US dollar price action until the 1Q18 GDP data are released.

Next, we’ll discuss how the Bank of Japan could influence the yen this week.

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