Cable trades at highest level since June; Markets await payroll and labour market data
GBP has enjoyed a strong start to April, following historic trends. The outlook for the currency could remain upbeat if historic seasonality is anything to go by, according to analysts from Crédit Agricole.
April has been by far the best month for the GBP over the years and its outperformance across the board has usually been explained by the start of the new fiscal year and related corporate repatriation of hedging flows.
GBP/USD has rallied this morning, taking the pair to its highest point since June 2022 (mid-1.24's). UK economic outlook combines with a broader Dollar retreat to keep 2023's uptrend in GBP/USD say analysts.
The GBP was the top-performing major currency of the first quarter as it benefited from a run of economic data that has proven stronger than analysts were expecting. A pair of interest rate hikes at the Bank of England and a continuation of the Bank's data-lead approach to further policy moves have also fuelled GBPUSD’s significant rally.
The Pound clinched its biggest monthly rise since November last year versus the US dollar, as narrowing US-UK rate differentials and better-than-expected UK economic data fuelled demand for the UK currency.
GBP/EUR has also enjoyed a strong start to the early trading session on Tuesday, currently trading up 0.24% on the day and taking the rate back above 1.1420 at time of writing.
In other news, the US Dollar was testing a two-month low against its major partners early on Tuesday, still under pressure after weak data from the manufacturing sector on Monday that encouraged hopes of an early 'pivot' from the Federal Reserve. Fed Governor Lisa Cook had said after the figures that she still expects interest rates to rise a little further yet, given that the U.S. labour market remains strong.
By contrast, data from the euro zone on Tuesday was relatively upbeat. German exports, typically an influential source of external demand for euros, posted their biggest monthly rise since June in February. This added to evidence that the euro zone's largest economy may avoid recession in the first quarter of the year.
As a result of the above EUR/USD has seen a further rally, taking the pair back above 1.09. Investors and analysts will keep an eye on ADP National Payroll data and Non-farm payroll later in the week for fresh impetus on dollar pairs going forward.
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