Strong Start to New Week for Pound Sterling against the Euro and U.S. Dollar

- GBP finds bids as new week starts
- GBP/EUR can rise to 1.15 and above this week
- GBP/USD can rally this week

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• Market rates at publication: GBP/EUR: 1.1500 | GBP/USD: 1.3915
• Bank transfer rates: 1.1280 | 1.3625
• Specialist transfer rates: 1.1420 | 1.3818
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The British Pound enters the final week of April on the front foot, advancing against all its major peers apart from the Australian Dollar.

April is typically a strong month for Sterling from a seasonal perspective, however April 2021 has disappointed those who were looking for a stronger UK currency.

It appears the strong supportive winds that lifted the Pound in the first three months of the year have lost strength over recent weeks, leading to some 'position squaring' in the market.

Above: GBP performance at the start of the new week.

The UK is nevertheless expected to see a strong economic rebound over coming weeks and months, which leads a number of analysts we follow to believe the Pound should remain supported with any periods of weakness ultimately proving shallow.

"In many ways, Q1 was almost the perfect backdrop for GBP outperformance," says Kamal Sharma, FX Strategist at Bank of America.

He says contributions to outperformance included "the release valve of a Brexit deal; strong cyclical tailwinds; rising global rates and perhaps most significantly, the UK's exemplary vaccine rollout process which surprised following 2020's pandemic response."

At the time of publication, the Pound-to-Euro exchange rate is quoted at 1.15 at the time of writing, having been as low as 1.1468 earlier in the day.

The Pound-to-Dollar exchange rate is quoted at 1.3925, having been as low as 1.3865 earlier in the day.

Despite declines over recent weeks, the Pound is nevertheless holding up a 2.77% gain on the Euro for 2021 while the advance against the U.S. Dollar now stands at 1.80%.

In fact the UK currency has advanced against all its G10 peers apart from the Norwegian Krone and is down a mere 0.20% against the Canadian Dollar.

New research from Bank of America says both survey and flow evidence shows that UK assets were underinvested at the start of the year but UK Plc has attracted significant portfolio inflows over recent weeks and months.

"Against the backdrop of an abundance in global liquidity and strong cyclical tailwinds, GBP should remain supported through the rest of the year particularly versus the likes of CHF and JPY," says Karma.

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Pound-Euro Week Ahead Forecast:

The Pound-Euro exchange rate edged lower last week but could close the gap over the coming days with a swift reclamation of 1.15 leading to a choppy but ascending range throughout this quarter, shows our week ahead forecast for the Pound against the Euro.

Pound Sterling was one of the big fallers when the Euro rallied late last week but with the UK economic picture too robust for it to be left behind by the single currency, a swift recovery of 1.15 is likely first on the agenda this week.

Pound-Dollar Week Ahead Forecast:

The Pound-to-Dollar exchange rate rate is on the cusp of another firecracking rally that will be aided by investors' improving sentiment toward the global economy as well as trade-weighted depreciations of the greenback and the Renminbi, shows our week ahead forecast for GBP/USD.

Pound Sterling fared poorly last week even in the face of robust UK economic data, leaving the Pound-Dollar rate in line for a Monday catch up with European counterparts ahead of a big week for U.S. economic data and the Dollar.

The UK calendar is quiet over the coming days although brighter global prospects are likely to be buttressed by strong U.S. GDP data, which could exact a toll from the countercyclical Dollar.

This would be just before the Federal Reserve (Fed) gives its nth iteration of a decidedly Dollar-bearish policy outlook.

“From this point forward the greenback may face tougher competition. Once the vaccination campaigns in major markets have progressed further we expect FX markets to refocus on the Dollar’s structural negatives,” says Zach Pandl, co-head of global FX strategy at Goldman Sachs.