Currency Note

Sterling maintains weekly gains against US dollar

By Sharyh Murray-Francis March 27th, 2023

The pound begins today with fresh weekly gains of around 0.46% against the US dollar after ending last week near its highest levels since last spring.  Against the euro, Sterling is weaker compared to last Monday by around -0.52%.

The latest report from the UK’s National Audit Office (NAO) has revealed that the cost of building London Euston’s high speed train line has risen to nearly £5bn. HS2 trains were originally scheduled to run into Euston from 2026 but are now expected to run from 2041-43.

On the political front, the Scottish National Party will announce today who has won the race to replace Nichola Sturgeon as Scotland’s next first minister.

This week is a fairly moderate one for UK data but investors will still have key economic releases to digest. This includes speeches from the Bank of England’s governor, Andrew Bailey, mortgage lending and approvals. This is all before GDP on Friday.

Following the European Central Bank’s recent rate hike, ECB officials are scheduled to deliver speeches over the course of this week. Economists will be listening closely for any Hawkish comments which could boost the euro.

Eurozone unemployment and inflation figures will also be released this week – and in the US, markets will see the return of non farm payrolls.

On Friday, shares of German multinational investment bank, Deutsche Bank, tumbled after the bank announced the redemption of $1.5 bn in a set of tier 2 notes due in 2028, and its credit default swaps surged to the highest level since their first introduction in 2019.

Japanese stocks made gains during last night’s Asian trading hours. The Nikkei 225 Index rose 0.1% to approximately 27,412, while the broader Topix Index gained 0.15%, rising to 1,958 on Monday following a positive session on Wall Street Friday.

In US Stock markets, the dollar index held close to 103 on Monday, maintaining its recent gains as investors continued to assess the potential trajectory of the recent banking turmoil and the Fed’s outlook on monetary policy. This comes after Federal Reserve Chair, Jerome Powell, said that officials “don’t see rate cuts this year and are prepared to prolong their tightening cycle if needed.“

US dollar-watchers have lots to unpack this week, with the spotlight pointing to US inflation and speeches from Fed officials.

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GBP: CBI distributive trades predicted to plumet

The CBI distributive trades survey’s retail sales balance surged 25 points in February to +2, easily beating market expectations of -13. This morning economists are expecting that number to fall by -18.

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EUR: Ifo Business Climate beats forecasts

The Ifo institute released the latest business climate index for Germany at 9am this morning. Markets were expecting the index to remain unchanged however this morning’s result exceeded expectations. Business Confidence in Germany increased to 93.30 points in March from 91.10.

USD: Data-filled week for dollar-watchers

There will be lots of high impact economic data releases rolling out over the course of this week.

Economists will be keeping a watchful eye on these releases to see how they impact the US dollar’s movements against its rivals.

Markets will see the latest personal spending data, non farm payrolls, unemployment and much more.

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