image of two people employed in the manufacturing industry

Sterling consolidates on house and manufacturing data

The pound has consolidated its position after housing data showed an average £3,000 rise in the asking price for UK houses on the Rightmove website and manufacturing data showed a healthy gain in confidence suggesting confidence will continue to rise in the months ahead.
Bank of England

BOE rate hike expected but what next?

Sterling had a positive week last week, gaining ground against the beleaguered USD and the Euro. However, as the USD was being battered in relation to the failure of SVB and the emergency refunding of Credit Suisse, the likes of the Aussie and Kiwi dollars had a good week as well.

ECB Deliver Rate Hike Despite Financial Instability

The ECB followed through on its long-communicated guidance with a 50bps hike yesterday but accompanied this with very limited signalling regarding the future policy path, against a backdrop of financial stability concerns. Had this meeting taken place just one week ago, the bank may have sounded a more hawkish note, given yesterday’s revision are higher than its core inflation and GDP growth forecasts.

USD volatile with bank issues v data battle

The US dollar started to recover yesterday but was then rocked by a dreadful Empire State Manufacturing Sentiment Index of minus 24.6, against a forecast of minus 8. There is also turmoil in banking stocks after The Saudi National Bank refused to further fund Credit Suisse and they had to turn to the Swiss National Bank for up to $54 billion in funding.

Shockwaves from SVB collapse pound global bank stocks

Shockwaves from the collapse of Silicon Valley Bank further pounded global bank stocks on Tuesday as assurances from President Joe Biden and other policymakers did little to calm markets and prompted a rethink on the interest rate outlook. Biden's efforts to reassure markets and depositors came after emergency US measures to shore up banks.
British coin, £1 coin symbolising Sterling drop

Sterling paused for spring statement

UK Chancellor of the Exchequer, Jeremy Hunt, will deliver his spring statement today. No one in Government calls it a budget, but it is. If the pundits are right, the emphasis will be on getting people into work and growing the economy. That would be super. For now, traders have paused on the pound - it is still in better shape than it was last week.

Bank failure pours doubt on US rate plans

The failure of US Silicon Valley Bank sent shudders through the investor world at the end of last week. Nervous investors tend to buy US assets but it is those US assets that are causing the concern. Hence the US dollar weakened on Thursday and Friday and remains weak this morning.
gbp pound sterling

GBP finds buyers on positive GDP data

The financial markets were fairly convinced the economic growth data for January would confirm their worst fears; that the UK is heading into a recession. They’ll be eating those words for breakfast after the data showed 0.3% growth in January. That didn’t wipe out the 0.5% contraction in December but it is better than a poke in the eye with a sharp stick. Sterling found some buying interest in early trade and it has made gains across the board.

Bank of Canada on hold, as expected

The Bank of Canada did as the markets expected and left Canada’s base rate on hold at 4.50%. After a year of eight interest rate hikes in a row, the BoC became the first major central bank to pause the rate hikes. They believe inflation is in a better place now and, having seen Consumer Price Inflation spike to 8.1% last year but ease off to 5.9% in January, you could see their argument.
US dollars

USD boosted by prospect of further Fed hikes

The chairman of the US Federal Reserve was answering questions in Washington DC yesterday and, although he stated the blindingly obvious, it was enough to boost the US dollar. Chairman Powell made it clear that if the data suggests further interest rate hikes are necessary to control inflation, the Fed will hike interest rates accordingly.

RBA follows the script

As expected, the Reserve Bank of Australia lifted their base rate by 25 basis points to 3.6% when they met earlier today. That’s the 10th consecutive rate hike and it brings the base rate back up to 2012 levels. Also as expected, their statement was a little less gung-ho than previously.
USDEUR

USD weakens ahead of busy week

The US dollar gave up some of its gains in the last couple of trading days. That allowed the GBPUSD rate to climb back to $1.2050 and the EURUSD rate to gain ¾ of a cent to this morning’s $1.0660.

AUD gains as service sector returns to growth

The purchasing managers index for Australia’s services sector rose into the growth end of the spectrum in February for the first time since October. At 50.7, the index is only marginally above the 50 level that marks the difference between optimism and pessimism but it is good news nonetheless. Sadly, Australia’s housing market data is less encouraging.

Neutral BOE and Brexit concerns knock GBP

The Governor of the Bank of England, Andrew Bailey, was very even-handed when he spoke yesterday. That unnerved the markets, as did the DUP’s scepticism over the new Brexit agreement, which is yet to be ratified by Parliament. Edgy traders sold sterling across the board. So, even though the USD had a generally poor day, the GBPUSD rate slipped below $1.20 again.
China economy

GBPUSD marches higher

The Cable pair rose to the highest levels in a week earlier on Tuesday before reversing from 1.2143 as optimism surrounding the Brexit deal and the pair’s strength from softer US data faded as the key March month begins. Although UK PM Rishi Sunak has already signalled that he will move forward without the Democratic Unionist Party’s (DUP) support for Brexit deal...
signs of brexit breakthrough

USD slips after poor durable goods data

The shine was taken off the US dollar after a 4-day winning streak. The GBPUSD rate rose more than 1% but that was partly a GBP story. More of that below. The EURUSD rate also rose back above $1.06 for the first time since Friday. A 4.5% contraction in January’s US durable goods orders was worse than market forecasts...

BoE and another Brexit Deal?

In the BoE policy sphere, the week gets underway with an appearance, but MPC member and deputy governor Ben Broadbent, who delivers opening remarks at the Bank of England Agenda for Research Conference from 09:30 on Monday.

Hawkish Fed Minutes have put traders and investors on the edge

Deutsche Bank has lifted its forecast for where the European Central Bank's key rate will rise to in this tightening cycle to 3.75% from 3.25%, the German bank said in a note on Wednesday. Deutsche economists now expect the ECB to raise interest rates by 50 basis points (bps) at its March and May meetings, followed by a final hike of 25bp in June.