- GBP/USD is sinking as a firm US dollar takes the lead.
- The Fed sentiment is a driving force along with the risks associated with the Russin crisis.
GBP/USD is down some 0.22% and has fallen from a high of 1.3064 to a low of 1.3025. The US dollar is taking the lead on Easter Monday in holiday conditions with plenty at stake for the week ahead in both economic data, central bank sentiment and the Ukraine crisis.
There are still no signs of progress in peace talks between the two nations. From the weekend, Reuters reported that the Ukrainian Foreign Minister Dmytro Kuleba said there had not been any recent diplomatic communications between Russia and Ukraine at the level of their foreign ministries and that the situation in the port of Mariupol, which he described as “dire”, may be a “red line” in the path of negotiations.
Meanwhile, the markets will be keeping an ear to the ground for Fed speak. Firstly, St. Louis Fed President and FOMC member James Bullard are slated and would be expected to offer further insight into the likely monetary policy action by the Fed. However, the mega event will be the speech from Fed Chair Jerome Powell, which is due later this week.
”We are of the view that the Fed is broadly in-sync with the move toward the vicinity of neutral by the end of 2022, with Governor Brainard supporting that view recently. Chair Powell’s remarks in an IMF panel on the global economy will get the focus of the attention,” analysts at TD Securities explained.
”While the Fed is signalling its intent to reach neutrality by year-end, and to start an aggressive QT regime, outflows from gold markets have been scarce as participants are happy to retain some optionality against the Fed’s stated plan amid growth concerns,” the analysts added.
Meanwhile, the sentiment around the Bank of England is dovish from the dovish hike delivered in March on around concerns over the growth outlook. Nevertheless, stronger-than-expected inflation over the coming weeks could add pressure to act more decisively.