UK: Weekly FX Market Update 18 March

CalendarMarch 18, 2024
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GBP
  • Sterling was on the front foot when UK labour market conditions were shown to have eased last week, and UK GDP showed the economy climbing out of recession.

  • GBPUSD, however, fell by over 1% after US data strengthed the dollar.

  • A potentially volatile week ahead includes UK CPI, which is released on Wednesday, followed by the Bank of England’s (BoE) interest rate decision on Thursday. Retail sales are released on Friday to round the week off.

  • The BoE decision is expected to hold rates steady. So, it could be the US Federal Reserve (Fed) on Wednesday that really motivates GBPUSD.

  • Will recent GBPUSD strength continue, or will the Fed push GBPUSD back below 1.2500?

EUR
  • The European Central Bank (ECB) is now the most dovish central bank when compared to the Fed and the BoE.

  • ECB governing council member Stournaras said that it was ‘appropriate to do two rate cuts before the summer break, and four moves throughout the year seems reasonable’.

  • With US inflation sticky above 3%, UK inflation still at 4% and Eurozone inflation at 2.6%, will investors bully the euro lower?

  • ECB President Lagarde speaks on Wednesday and PMI data is released on Thursday.

  • Will EURUSD slump lower, or will it manage to trade above 1.1000 again soon?

USD
  • The last yards are the hardest seems to be the case for US inflation, as CPI and PPI both strengthen in February.

  • All eyes are on the Fed decision this Wednesday, especially the 'dot plot'.

  • Will the latest inflation readings have impacted the FOMCs own outlook for rate cuts this year?

  • PMI data is released on Thursday. Will the US dollar make a comeback?


Main events for this week:

Mon Mar 18

10:00 EUR Final CPI

Tue Mar 19

03:30 AUD RBA Cash Rate/Statement

04:30 AUD RBA Press Conference

05:30 BoJ Policy Rate/Press Conference

07:00 CHF Trade Balance

10:00 EUR ZEW Economic Sentiment

12:30 CAD CPI

Wed Mar 19

07:00 GBP CPI

08:45 EUR ECB President Lagarde Speaks

18:00 USD Int Rate Decision/Dot Plot/Statement

18:30 USD FOMC Press Conference

Thu Mar 21

08:30 CHF SNB Policy Rate

09:00 EUR Flash Manufacturing/Services PMI

09:30 GBP Flash Manufacturing/Services PMI

12:00 GBP BoE Int Rate Decision/MPC Summary

13:45 USD Flash Manufacturing/Services PMI

Fri Mar 22

07:00 GBP Retail sales

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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