Morning all
Hope you’ve enjoyed the start of Spring over the weekend!
GBP
Performing really well against USD…
However a big day tomorrow with the release of the February employment data, followed by March inflation data on Wednesday, which could determine whether Bank of England officials decide to hike interest rates by another 25-basis points at their meeting next month. Looking back, inflation unexpectedly rose to 10.4% in February which cemented the case for March’s rate hike. For now, economists expect inflation to return to single digits in March, but this would still be well above the rate of inflation seen in the U.S. and Europe. Ultimately, while Britain’s economy has managed to avoid a recession, growth has stagnated over the past year. Markets anticipate the Bank of England will hike interest rates next month to 4.5% from 4.25%, which would be its twelfth consecutive rate increase since December 2021! Watch this space.
EUR
I’ve always maintained when tourism starts in Europe, the EUR strengthens and since the half term break it has done just that.
The Euro seems to be consolidating its recent gains as traders seek more clues on the direction of the EUR so major attention will be given to this week’s PMIs on Friday to reconfirm the economic recovery hopes.
USD
Still great value way above 1.22! Ultimately, with US inflation cooling quickly and the Fed policy makers expressing concerns that weakness in the banking sector could result in a “mild recession” this year in the US, traders are starting to factor in a pause in the central bank’s rate-hiking cycle in May. 1.30 before the end of Q2?
Have a good week