Currency Note

Economists digest latest UK inflation data

By Alex Bennett April 19th, 2023

UK inflation eases but food prices remain at their highest level in 45 years.

Since yesterday, sterling has strengthened against the majority of G10 currencies, including the euro and US dollar, but on a weekly footing sterling enters the day with mixed  results — still weaker against the euro and Canadian dollar. This comes after investors digest this morning’s key economic release, UK inflation. Continue reading for the results.

Markets will also see the latest eurozone inflation data at 10am, followed by a flurry of key economic releases from the US.

The US dollar index (DXY) steadied just below 102 on Wednesday as markets reassessed the Federal Reserve’s outlook for monetary policy.

Tomorrow, Japan will take the spotlight with the latest balance of trade data and on Friday, the UK will churn out a few economic releases. Ones to watch include retail sales and Gfk consumer confidence.

In the stock markets yesterday, London’s benchmark FTSE 100 ended above the 7,900 mark pointing to gains for the eight session in a row.

But it was a different story for US stocks. A plethora of US economic data saw the Dow lose over 100 points on Tuesday – the Nasdaq 100 and S&P 500 traded close to the flatline.

The Swiss franc also had a tough day, falling from its two-year high against the US dollar touched on April 13th. This comes after growing expectations that the Swiss National Bank will bring its tightening path to a close.

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GBP: Yearly inflation eases

We’ve just seen the latest annual inflation rate for the UK fall to 10.1% in March, from 10.4% the month before. Despite cooling, the rate remains above 10% for a seventh consecutive period and is still just over five times the Bank of England’s 2% target.

As the rate has remained above target for almost two years, economists say policymakers might continue to hike rates to combat inflation. Many will be watching for any impact on sterling over the course of today.

GBP/USD over the past year

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EUR: Germany’s ZEW Economic Sentiment falls

According to the Centre for European Economic Research, the ZEW indicator of economic sentiment declined for the second consecutive month yesterday hitting its lowest level this year. The indicator fell to 4.1 in April, nearly four times lower than the predicted 15.3.

USD: Dollar does a U-turn

After strengthening on Monday off the back of rumoured hawkishness, the US dollar weakened against is sterling and euro rivals by the end of Tuesday afternoon.

This morning the dollar is weaker against the pound and euro compared to this time last week, as investors digest yesterday’s economic data. Data released on Tuesday includes building permits, which tumbled 8.8 percent to a seasonally adjusted annual rate of 1.413 million in March.

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