UK: Weekly FX Market Update 27 March
The Bank of England hiked rates as expected last week. The pound was relatively unimpressed
Some analysts suggest that the latest hike could be the last hike of the Banks hiking cycle
BoE Governor Bailey said that inflation was due to come down ‘sharply’ from this summer
UK GDP and Current Account data are released on Friday. Can the UK economy really avoid recession this year?
ECB President Lagarde became the most hawkish central banker last week, saying ‘We must and will’ get inflation back to 2%.
The markets concern over the banking system has now spread beyond the US to Europe, with rumours surrounding more than one large European giant.
EURUSD had been gaining on US banking concerns, but has since fallen on European bank worries and weak PMI readings.
Eurozone Flash CPI and GDP are released on Friday. Could inflation data take a back seat to banking liquidity concerns?
The Fed hiked rates by 0.25% last week. Some investors think that’s the end of the US rate hike cycle.
Investors hoped that the Fed had managed to calm the market after the SVB collapse, however, First Republic Bank remained under pressure and the US equity markets slumped at the end of the week.
US Final GDP is released on Thursday, whilst Core Personal Consumption Expenditure is released on Friday. Will this refocus the Fed on inflation or will a forthcoming banking crisis dominate the markets?
Events for the week ahead:
Mon Mar 27
09:00 EUR German IFO Business Climate
Tue Mar 28
01:30 AUD Retail Sales
13:30 USD Goods Trade Balance
15:00 USD Consumer Confidence
Wed Mar 29
01:30 AUD CPI
12:00 GBP Financial Policy Committee Minutes/Statement
Thurs Mar 30
07:00 EUR German Retail Sales
07:00 EUR German Prelim CPI
09:00 EUR ECB Economic Bulletin
13:30 USD Unemployment Claims/Final GDP
Fri Mar 31
07:00 GBP Current Account/Final GDP/Revised Business Investment
10:00 EUR CPI Flash estimate/Prelim Flash GDP
13:30 CAD GDP
13:30 USD Core PCE
15:00 Revised UoM Consumer Sentiment/Inflation Expectations