This working from home confuses your pets, doesn’t it.
Whilst the UK economic data was not bad this morning, Sterling’s rebound probably has more to do with a combination of profit-taking and an appreciation of the UK’s ramping up of measures to beat this nasty virus. Sterling jumped to USD 1.1850 and to EUR 1.09 in the last 24 hours; welcome respite to those who need to sell the pound and buy other currencies.
Which currencies are supporting Sterling’s rebound?
The Pound remains well supported against other currencies, like the Australian Dollar and New Zealand Dollars and the Rand and Canadian Dollar. The data we saw this morning was the Consumer Price Inflation (CPI) inflation at 1.7% (in line with expectations) and producer prices which fell slower than expected at minus 1.2%. There is no further UK data today but, as was mentioned yesterday, COVID-19 announcements trump economic data at the moment and we may well have some of those.
Euro remains a safe investment
The Eurozone is braced for what are expected to be very poor German business sentiment indices, as published by the Ifo institute. The Euro remains a perceived safe place for investors in spite of the ravages of the Coronavirus. Vast liquidity will do that to a currency.
Today’s economic data releases
Besides Sterling’s rebound, there are more economic news awaited. Here is the economic data that markets will be watching:
UK: COVID-19 and Bank of England meeting
There isn’t a great deal of data due from elsewhere today, so we will have to rely on announcements regarding the pandemic to drive market sentiment. What a sad state of affairs that is. Tomorrow being a Bank of England meeting but, after the recent interest rate slash exercise, little is expected from the BOE. We will also get UK retail sales but that will reflect the Feb numbers; the calm before the storm. Tomorrow also brings US GDP data which may be influential, dependent on other news.
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This afternoon brings another rash of economic data from the US which we envisage will be negative. That probably won’t dent the markets’ appetite for the US Dollar in these times of crisis, but it may abate the strengthening of the USD. The key data here is the durable goods orders, which are forecast to be poor.
Oh, and the dipstick who filmed himself licking products on shelves in a US supermarket has been arrested and charged with making a terrorist threat. That seems an odd charge but as long as he is being stopped, who am I to complain.