The British Pound has recently traded in a mixed manner, gaining against some currencies while losing ground against others. Market players will closely watch Bank of England Governor Andrew Bailey’s address tomorrow. Because there is no Bank of England decision expected in April, tomorrow’s speech will function as a bridge to the May meeting, giving him the opportunity to address the matter of probable rate reduction at the Bank.

The Euro has been in free fall for most of last week, battered by a hawkish Federal Reserve and a dovish European Central Bank. In fact, if underlying inflation continues to fall as projected, the ECB may contemplate lowering policy rates in June, clearing the path for a rate cut and expanding the difference between the two central banks’ monetary policies.

Over the weekend, the US dollar reached five-month highs against a basket of currencies, as safe haven demand increased in response to an escalation in the Middle Eastern situation. Furthermore, the dollar was supported by rapidly falling odds that the Fed will cut interest rates in the first half of 2024. This follows strong inflation statistics from March.

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