GBP

The pound touched on a 27-month high last week as strong UK economic figures bolstered sterling demand and the case for a sooner-than-previously forecast rise in interest rates. GBP/USD eased slightly towards the end of the week, but was trading close to its highest level since August 2011. The pound lost ground on the euro, however, sliding around 0.5 per cent for the week. After a data-heavy few days last week, which saw the Bank of England stand pat on monetary policy, Monday sees governor Mark Carney deliver a speech that investors will follow for more clues about future policy direction. Tuesday’s manufacturing production data will also be one to watch.

EUR

Support for the euro remained in place as the European Central Bank failed to offer any tangible efforts to tackle the low inflation that threatens to derail the bloc’s recovery. EUR/USD was at a five-week high, within touching distance of the key 1.37 level even as US jobs and GDP data lent support to the Fed tapering stimulus. The euro rose against sterling last week, while it surged to a more-than five-year high against the broadly weaker yen. The ECB said it will remain accomodative and will keep interest rates at their current levels or lower for an extended period of time. However many are concerned that deflationary pressures will require stronger action and more easing.

USD

The dollar finished the week on an upbeat note after US jobs data beat expectations, snapping a week of losses. Even with the Labor Department reporting payrolls increased by 203,000 last month, however, the greenback was still holding steady at a five-week low against the euro. Gains were seen against the yen by the end of the week, with USD/JPY climbing back close to Monday’s six-month highs. The dollar also touched on a three-year peak against its Canadian counterpart. Looking ahead, markets will be assessing the potential impact of the jobs data on the Fed’s decision on tapering asset purchases this month or later. On Monday, Federal Open Market Committee member James Bullard will speak, while Thursday will see retail sales and unemployment data released.

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