As we come out of the Easter weekend and normal trading resumes, the pound is enjoying a high against the dollar while regaining some lost ground on the euro.
Following US president Donald Trump’s rebuke of Federal Reserve chair Jerome Powell, the US stock market and dollar sank against competitors. The president called the chair slow and demanded he lower interest rates. The attacks sent the dollar to a three-year low against the euro and, at 1.341, the pound is within spitting distance of a two-year high against the dollar.
Powell, who has repeatedly said that the uncertainty caused by the first months of Trump’s second term mean he won’t lower interest rates, is firmly in the president’s crosshairs. Although Powell isn’t due to leave his post until May 2026, Trump says he is exploring ways to replace the chair with someone willing to lower interest rates.
This week, world banking leaders are meeting in Washington for the International Monetary Fund’s Spring Meetings. This afternoon the group will publish its World Economic Outlook, which is likely to be dominated by the impact of Trump’s tariffs and the looming threat of trade turmoil and recession.
While the Easter weekend traditionally sees a slowdown in trading, the week ahead is filled with events that could impact the markets.
Tomorrow morning Germany’s manufacturing PMI will reveal the immediate impact of Trump’s tariffs and in the afternoon S&P’s manufacturing and service PMIs will do the same for the UK. The evening will be capped off with a speech from Bank of England chair Andrew Bailey, which will give some indication of whether we can expect an interest rate cut when the Monetary Policy Committee meets next on 8 May.
On Thursday, US trade and home sales data will indicate whether Americans are showing more caution on large purchases in the face of the growing economic uncertainty.
Then, on Friday, UK retail sales data will reveal if last month’s bump was a blip or the start of a trend.
With so much uncertainty and growing pressure on Powell from Trump, the market may prove to be incredibly volatile this week.
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