UK: Weekly FX Market Update 26 February

CalendarFebruary 26, 2024
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GBP
  • The pound was supported against its peers last week, in part due to the Purchasing Managers Index data showing a strong Services sector.

  • Sterling also enjoyed the benefit of the ‘risk on’ theme coming from the US equity markets.

  • This week is littered with Bank of England speakers, with talks on Monday, Tuesday and Friday.

  • Is the Bank’s hawkish determination to reduce inflation from its 4% level supporting the pound?

EUR
  • Data released last Friday showed that German GDP contracted by 0.3% in Q4 2023, having stagnated for the previous three quarters.

  • French Economic Minister Bruno Le Maire announced that the Eurozone has ‘defeated inflation’. Does that mean an early rate cut from the ECB?

  • On the other side of the argument, Austrian Central bank Governor Holzmann said that he ‘didn’t see circumstances for the ECB to cut rates before the Fed’. Bundesbank President Nagel agreed with Holzmann. Saying, ‘it is too early to cut rates’.

  • Eurozone CPI was confirmed at 2.8%. What will Flash CPI on Friday show?

USD
  • FOMC Meeting Minutes were as hawkish as expected, as were FOMC speakers Jefferson, Harker and Waller. Despite this, the market sold US dollars.

  • Could the USD weakness have been due to the Nvidia results and a ‘risk on’ mentality powered by the revolution in Artificial Intelligence?

  • Results beat analysts’ expectations, as they reported a 265% increase in fourth quarter revenues at USD 22.1 billion. They expect current quarter revenues to be even higher at USD 24 billion.

  • Fed Speakers and Preliminary GDP on Wednesday can give direction on interest rates and the strength of the US economy this week.


Main events for this week:

Mon Feb 26

09:00 GBP MPC Breeden Speaks

11:00 GBP MPC Pill Speaks

15:00 USD New Home Sales

Tue Feb 27

00:01 GBP BRC Shop Index

13:30 USD Durable goods

13:40 GBP MPC Ramsden Speaks

15:00 USD Consumer Confidence

Wed Feb 28

00:30 AUD CPI

13:30 USD Prelim GDP/Goods Trade Balance

17:00 USD FOMC Bostic Speaks

17:45 USD FOMC Williams Speaks

Thu Feb 29

00:30 AUD Retail Sales

07:00 EUR German Prelim CPI

13:30 CAD GDP

13:30 USD Personal Consumption Expenditure/Unemployment Claims

18:15 FOMC Mester Speaks

Fri Mar 1

01:10 USD FOMC Williams Speaks

10:00 EUR CPI Flash Estimate

14:00 GBP MPC Pill Speaks

15:00 USD ISM Manufacturing PMI

15:50 USD FOMC Bostic Speaks

18:30 USD FOMC Daly Speaks

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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