UK: Weekly FX Market Update 11 March

CalendarMarch 11, 2024
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GBP

  • Sterling had a decent week after an ‘as expected’ Budget was delivered. Notably, the pound is the only developed world currency to rise against the US Dollar this year.

  • The rationale behind the Sterling’s strength, is the narrative that both the European Central Bank and Federal Reserve will look to cut rates sooner, and deeper, than the Bank of England.

  • Looking to the week ahead, UK employment data is released on Tuesday and UK GDP on Wednesday.

  • GBPUSD is now trading at levels not seen since July last year, and above the Christmas high. Can it now target 1.3000?

EUR

  • The ECB held rates steady last week with President Lagarde saying that the ECB aren’t ‘sufficiently confident’ to commence easing.

  • Austrian central banker Holzmann said that ‘a change in rates may be in preparation’.

  • Bundesbank President Nagel said that he ‘sees a rising chance of a rate cut before the summer break’.

  • However, EURUSD moved higher as bets on a US rate cut increased. Can EURUSD break 1.1000?

USD

  • The US Dollar was on the back foot last week, with Fed Chair Powell saying that the Fed is ‘not far’ from having the confidence to cut interest rates.

  • With a steady employment report released on Friday, Bloomberg analysts gave a 100% chance of a US rate cut in June.

  • This week, US CPI is released on Tuesday, Retail sales on Thursday and Consumer sentiment on Friday.

  • Will this weeks data points do anything to change the current dollar weakness story?

  • Don’t forget, the US clocks sprung forward over the weekend.


Main events for this week:

Mon Mar 11

No Top Tier Data

Tue Mar 12

07:00 GBP Claimant Count Change/Average Earnings/Unemployment Rate

11:00 GBP MPC Mann Speaks

12:30 USD CPI

17:01 USD 10 Year Bond Auction

Wed Mar 13

07:00 GBP GDP/Goods Trade Balance/Industrial Production/Manufacturing Production

Thu Mar 14

12:30 USD Retail Sales/Producer Price Index/Unemployment Claims

Fri Mar 15

09:30 GBP Consumer Inflation Expectations

12:30 USD Empire State Manufacturing Index

13:15 USD Industrial Production

14:00 USD Prelim UoM Consumer Sentiment


Author

Trevor Charsley

Trevor Charsley

Senior Market Strategist

Trevor has over 25 years' trading and sales experience. He produces regular market and technical analysis as well as help with the structure and management of FX hedging policies. Trevor is often listed among the top "currency forecaster on Bloomberg".

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