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March 2017

Sterling fails to launch after Budget as USD wins

Published: Thursday 09 March 2017

  • Sterling fails to launch after Budget as USD wins
  • US private payrolls surge
By David Johnson
There was no doubting the main news story for the UK yesterday. It was the banter-strewn Budget of Philip Hammond. His upgrading of Treasury forecasts and downgrading of borrowing forecasts were largely well received; less so the news of higher National Insurance for the self-employed. Overall, it was a more upbeat affair than many had expected, but there’s the rub. We in the UK live in a time of poor forecasts and better results by and large. The Royal Institution of Chartered Surveyors (RICS) house market report released overnight is yet another example of the forecasters suggesting things would get worse and the data proving them wrong. And it must be said that the Treasury and the Government overall are pretty rubbish at forecasting anything. 
So, even taking his words and predictions with a pinch of salt, you would still have expected the Pound to have strengthened.Perhaps it would have if the US Private Payroll data hadn’t been rather upbeat and the US Dollar hadn’t strengthened, causing relative weakness for the Pound and therefore almost no movement in Sterling whatsoever.  
If you are planning to move your pension overseas and/or migrate, there were some changes that will have a major impact on your decision making and there are heavy tax implications if you make the wrong choice. We at Halo Financial are not experts in pensions and investments, but we have great contacts with companies that are. If you would like to speak to someone about your plans, let us know and we will make suitable introductions. 
Today’s big news is the European Central Bank’s (ECB) interest rate decision and statement. Once again, we are expecting no change on the base rate, but there is a real chance the ECB will start talking about reducing the supply of cheap money across the 19 country bloc. A drop in bond ownership by the ECB and a rise in the base rate could be on the cards for later this year, but the timing of those decisions is the key and any hint of an early hike will strengthen the Euro. Euro buyers may seek to take action before noon.
We will also get US import and export price data, but I think that is largely overshadowed by the interest rate concerns and anything the Federal Reserve or its talking heads say about that will have a greater impact. 
This afternoon also brings a smattering of Canadian data in the form of the House Price Index and capacity utilisation. Both could be influential on the Canadian Dollar. 
And I was so sad to hear that Gozo’s amazing rock formation, the Azure Window, had collapsed in bad weather. It was a fragile looking formation; eroded by wind and waves when I saw it last year, so its ultimate demise is perhaps not entirely unexpected, but there was an industry created around it with a visitor centre and souvenir shops. There will be a lot of people out of work as a result of its loss. Maybe Donald Trump’s wall makers can set about rebuilding it when they’ve finished?


Two bomb disposal officers decide they are going to do the London marathon but they think they’ll raise more money if they do it in their protective suits. The suits weigh nearly 40 kilos so they think they had better get some practice wearing the suits. They go out for a run, fully kitted up and after 5 kilometres they notice a man running behind them. He’s dressed in a suit and carries a briefcase but he is keeping time with them. 2k further down the road, they notice four other people running behind them. None of them is in running gear but they are still staying in time with the two soldiers. When there are five more of them a few kilometres further on, one of the soldiers gestures for his colleague to stop and he turns around to ask why these people are trailing them. The guy with the briefcase, through panting exhaustion says, “I just figured if two bomb disposal guys were running away, it must be a very big bomb."


Today's Major Economic Releases

EUR Day One Economic and Financial Affairs Council Meetings (ECOFIN)    
EUR 12:45 EU: Minimum Bid Rate 0.00% 0.00%
CAD 13:30 Canada: Capacity Utilization Rate 81.9% 82.6%
EUR 13:30 European Central Bank Press Conference    
USD 13:30 US: Unemployment Claims 223k 239k
USD 13:30 US: Import Prices 0.4% 0.1%

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