UK: Weekly FX Market Update 4 March

CalendarMarch 4, 2024
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GBP
  • The main driver for sterling this week could be Wednesday’s UK Budget. Will the Chancellor cut taxes ahead of an election, no later than 10 months away?

  • Other data points that can affect the pounds buying power include Thursdays ECB meeting and Fridays US Non-Farm Payrolls.

  • With a hawkish ECB, and an outperforming US economy, can the pound stay supported? Or will investors point to an economy in recession and an expected slump in UK inflation as a reason to sell sterling?

EUR
  • Ahead of Thursdays ECB meeting, ECB President Lagarde has spoken about her concern over wage growth continuing to drive inflation higher.

  • This narrative is in line with a recent Bloomberg survey, which indicated that the bigger mistake would be for the ECB to cut interest rates too early, rather than later.

  • However, with Eurozone CPI at 2.6% in February, down from 2.8% in January and close to its 2% target, can the ECB remain uber hawkish?

USD
  • Last week, US Personal Consumption Expenditure moved lower to 2.4% and close to the Fed’s 2% target.

  • Non-Farm Payrolls for January were very strong at 353k. Will Fridays data release show similar strength for February?

  • Is the US economy so strong that the Fed will not be able to cut rates this year?

  • What will Fed Chair Powell tell Congress about interest rate cuts on Wednesday and Thursday as he testifies to Congress?


Main events for this week:

Mon Mar 4

07:30 CHF CPI

23:30 JPY Tokyo Core CPI

Tue Mar 5

04:00 JPY BoJ Governor Ueda Speaks

09:00 EUR Final Services PMI

09:30 GBP Final Services PMI

14:45 USD Final Services PMI

15:00 USD ISM Services PMI

Wed Mar 6

00:30 AUD GDP

09:30 GBP Construction PMI

13:15 USD ADP Non-Farm Employment Change

14:45 Bank of Canada Interest Rate Decision

15:00 USD Fed Chair Powell Testifies

15:30 CAD Bank of Canada Pre4ss Conference

Thu Mar 7

13:15 EUR ECB Interest Rate Decision/Statement

13:30 USD Unemployment Claims

13:45 EUR ECB Press Conference

15:00 USD Fed Chair Powell Testifies

16:30 USD FOMC Mester Speaks

Fri Mar 8

10:00 EUR Revised GDP

13:30 CAD Unemployment Data

13:30 USD Average Hourly Earnings/Non-Farm Employment Change/Unemployment Rate

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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