GBP gains on rising economic mood ahead of budget
After a dip to test €1.1800 yesterday, the GBPEUR is looking a little more buoyant this morning. The pair starts Tuesday at €1.1865, so we ought to see another test of the heavy resistance at €1.1875 today. As previously mentioned, if the Pound can find a way through the EUR buyers at that level, the mythical €1.20 beckons like a lighthouse to a moth.
ECB expected to bat away inflation fears – EUR weakens
The Euro’s softer tone is largely due to poor business expectations sentiment in Germany. This was highlighted by the Ifo institute yesterday but there is a feeling in the market the European Central Bank will play down the risk of higher inflation at their meeting on Thursday. So, as well as the sterling-euro exchange rate rising, the EURUSD rate has dropped from $1.1665 yesterday to $1.1595 this morning. Other than speeches from the vice president of the Bundesbank and by Andrea Enria, Chair of the Supervisory Board of the ECB, there is no hard data to support the euro today.
Energy prices boost by La Nina effect
The US dollar appears to be deriving some strength from upbeat activity in the equities markets. An order of 100,000 Tesla vehicles by Hertz has pushed the market valuation for Tesla above a trillion dollars. we have also seen reports that the weather phenomenon La Nina will drive increase demand for energy products later in the year and that has caused a rise in the already overinflated energy markets. As for today, traders will be watching US new home sales and, understandably, the weekly release of US crude oil stockpile figures is likely to have a significant effect on the value of the USD. GBPUSD is bouncing between $1.3750 and $1.3850 and starts Tuesday mid-range at £1.3775.
Sterling’s stronger showing is being driven by rumours surrounding the budget The Chancellor of the Exchequer will deliver this week. Higher public spending and no backward step on taxes seem to be the preamble. However, there are also hints that the covid numbers this winter will be less scary than expected and recent data is suggesting the pace of the UK’s economic recovery is healthy.
AUD and NZD will be busy overnight
We can see some of that in the GBPAUD rate, which is ¾ of a cent higher this morning at AUD 1.8375. We will get Australia’s consumer price inflation overnight. Many forecasters are predicting a 3.1% figure; down from the previous month. However, inflation has been rising around the globe on rampant energy prices, so don’t be surprised if the number is higher than that.
The GBPNZD rate is similarly elevated at NZD 1.9240. We will see New Zealand’s trade balance figures overnight tonight. That has been worsening since December, so any improvement on last month’s annualised deficit of nearly NZD 3 million will be good for the Kiwi Dollar. However, with everything that has been going on, the opposite is probably more likely.
And the desperation to be popular on Instagram found a new low in the last few days. An unnamed woman in America chose her father’s funeral and his open casket as the scene for several photos of her in sexy poses with the attached hashtags of, ‘dadless’, ‘veteran’, ‘PTSD’ and ‘funeral’. The backlash appears to have caused her to take the post down and thank goodness for that but…for heaven’s sake, what is going on.