UK: Weekly FX Market Update 23 March
GBP
As the Iran war continues, the Bank of England (BoE) is quickly responding to expected higher inflation caused by the conflict.
The BoE’s pivot forces Bloomberg analysts to move from expecting a rate cut this month to expecting three rate hikes this year.
Sterling initially jumped higher on this, but if the Iran war continues, will this encourage GBPUSD sellers again?
EUR
The ECB has also been proactive in managing expected higher inflation.
Although the ECB held rates steady last week, two rate hikes are now expected in 2026. ECB Board member Nagel says that if inflation increases enough, they may hike rates as soon as April.
Flash PMI data may just catch sentiment readings from the start of the Iran war. Could they show another contraction is expected for the Eurozone economy?
USD
The Federal Reserve (Fed) held rates steady at 3.5% to 3.75%, but its forecasts still showed a possible rate cut in 2026 and 2027.
With Fed policy potentially diverging from the BoE and ECB, the US index retreats from its previous highs to trade below 100.00.
What is next for the Iran war, and what will Tuesday’s PMI data indicate for the US economy?
The US Administration is asking for another US$ 200 billion to fund the war. The budget deficit is US$ 38 trillion with no sign of attempting to reduce it. Just how long will the bond vigilantes stay silent?
Mon Mar 23
15:00 EUR Consumer Confidence
Tue Mar 24
08:30 EUR German Flash Manufacturing & Services PMI
09:30 GBP Flash Manufacturing & Services PMI
13:45 USD Flash Manufacturing & Services PMI
Wed Mar 25
00:30 AUD CPI
07:00 GBP CPI
08:45 EUR ECB President Lagarde Speaks
09:00 EUR German IFO Business Climate
12:00 GBP MPC Greene Speaks
Thu Mar 26
12:30 USD Unemployment Claims
16:00 GBP MPC Taylor Speaks
Fri Mar 27
07:00 GBP Retail Sales
14:00 USD Revised UoM Consumer Sentiment/Inflation Expectations
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