By Alex Edwards at UKForex, an international money transfer service
It was a fairly lacklustre start to the week, with it being Easter break. Most of this week, however, was dominated by USD strength – this despite the release of soft new home sales data.  On Thursday, GBP/USD fell to a low of 1.6766 following the release of stronger than expected US Durable Goods Orders, which rose by 2.6% in March vs. expectations for 2.1%.
The pound also finished the week on a stronger note after the release of better than expected retail sales data. GBP/USD bumped back above 1.68, but it seems the market is a little directionless at the moment – traders are reluctant to bid cable much higher, as long positions start to look slightly stretched, particularly ahead of a busy period for data next week.
Meanwhile, the euro was a little more volatile. It traded to a high of 1.3854 earlier in the week after the release of strong eurozone and German manufacturing and services PMIs. German IFO Business Climate data on Thursday was also strong, but on the same day EUR/USD fell back to a low of 1.3792, as ECB President Draghi made some fairly dovish comments. He said that QE could happen, should the inflation outlook worsen, and that the central bank might consider holding their monetary policy meetings less often. The ECB’s Luc Coene was speaking on Bloomberg later in the day, mentioning that a low inflation reading in April might lead the ECB to act in May.
It’s a big week for markets next week: GDP is due for release from the UK and US, the FOMC Statement is due on Wednesday, Yellen speaks on Thursday, and US Non-Farm Payrolls are due on Friday. It might just be the week that markets need, as the major currencies started to look somewhat directionless this week. The coming week has the potential to solidify market expectations for potential rate hikes from both the Bank of England and US Fed.
