DATA ON US CONSUMER CONFIDENCE WILL AFFECT POUND VS. EURO AND DOLLAR

In the very near future, markets will often be in a holding pattern, especially given the dearth of Federal Reserve remarks in advance of the policy meeting next week.

The Fed and ECB meetings the following week, Danske Bank predicts that “it could be another week of wait-and-see with low volatility.”

The Fed's interest rates will peak in May 2023, followed by a modest drop, while the ECB will maintain its hawkish stance with at least two additional rate hikes.

Additionally, there is hope that a recovery in the Chinese economy will boost the Euro and serve world economy.

As predictions hold true, a strong Euro tone will probably cause the dollar to trend downward.

If these underlying beliefs are challenged, there will be abrupt currency movements.

Further declines in Chinese stocks in this situation would tend to reduce risk taking and support the currency.

Predictions for the dollar to pound exchange rate

Because there were no changes on Monday, the pound's movements were mostly influenced by world news.

Investors believed that the Federal Reserve would achieve its interest rate before the ECB and Bank of England, which caused the US dollar to decline in value in this situation.

Overall, the GBP/USD pair can break higher to new 12-month highs above 1.2550, but only if the dollar plunges precipitously lower.

Current Euro (EUR) Exchange Rates

According to the most recent German IFO business confidence data, April saw a improved forecasts balancing a decline in existing conditions.

With hawkish ECB rhetoric supporting the euro against major currencies, the single currency has kept making net gains.

Markets trying to drive the pair to new 12-month highs. Failure would bring about a severe correction, and stock market to experiences pressure.

Outlook for US Dollar (USD) Exchange Rates

The Federal Reserve was mute ahead of its policy, as no notable US developments or large data releases on Monday.

With anticipation that US interest rates may rise earlier than in Europe, the dollar dipped against the euro.

The US dollar against the yen and commodity currencies, thus the currency index slid lower but managed to stay above April lows.

According to Wells Fargo, market expectations and Fed statements, the bank anticipates a final rate hike next month. According to the statement, “We believe the statement signal that May's hike may very well be the last of this tightening cycle.”

The following is added: “We would expect the statement to no longer include the language that ”some more policy firming may be needed if the majority of policymakers believe that the May meeting end this cycle's hikes.

Various Currencies

The British pound to Australian hit 14-month highs just above the 1.8700 level.

A fresh 6-month high was established by the British, the fresh Zealand dollar (GB/NZD), which then dropped to 2.0240.

The British pound to the Canadian dollar increased to 13-month highs at 1.6920.

Bank of Japan Governor Ueda failed to persuade the public that a lax monetary policy was desirable, and the yen struggled to find long-term support.

The Swiss franc maintained its strength, even though there is unsteady global risk climate.

The exchange rate between the pound and the franc (GBP/CHF) was held below 1.1100 and ended up at 1.175.

The Coming Day

A blackout period will continue at the Federal Reserve until the policy decision is made next week. However, markets will continue to monitor the media policy briefings.

Australia will publish the most recent inflation statistics over night for the first quarter of 2023.

According to consensus projections, the quarterly rise will be 1.3%, down from 1.9% previously, and the annual pace will slow to 6.6% from 6.8%.

The Swedish Riksbank is expected to raise interest rates by an additional 50 basis points to 3.50%.

Additionally, risk trends will be crucial given market reluctance on the prognosis for the world.