CAPE TOWN: Pound traders, the main focus was on whether there could be a UK interest rate hike in May.
Despite initial assumptions that a rate hike next month was likely, the closing sentiment was that the odds of an imminent increase to UK interest rates had fallen to the region of 50%.
GBP trader optimism initially rose on 17th April, when it was announced that the unemployment rate had fallen in February while wage growth had risen.
The average earnings figure was the main focus of the day, as it was reported that UK wage growth had overtaken the pace of inflation in February (by some measures).
This meant that UK consumers did not face a continued squeeze on their wages during the month, which sparked hopes that wage growth would continue to exceed the pace of inflation in the future.
In an unexpected twist, however, the Pound then crashed against the Rand on 18th April when it was reported that UK inflation rates had slowed to the lowest level in a year during March.
Traders had originally assumed that lower inflation would raise the chances of a Bank of England (BoE) interest rate hike in May, but later changed their minds.
The assumption was that if inflation slowed too quickly, BoE policymakers would be under less pressure and could hold off on hiking rates.
