Currency Note

Sterling EUR and USD gains ahead of key economic releases

By Sharyh Murray-Francis March 30th, 2023

Sterling maintains gains against the euro and dollar.

Market-watchers will have lots on their plate, with several economic data releases scheduled in over the course of today. We’ve just seen the latest annual retail sales data from Spain which edged down by 4% in February, from a near two-year high of 5.5% rise in the previous month.

Many will also be keen to see the latest US GDP data, the eurozone’s industrial sentiment and of course, any comments from the ECB’s general council meeting.

Housing markets took the spotlight yesterday as investors digested the latest mortgage lending and approvals data. Net approvals for house purchases in the UK increased to 43,500 in February 2023. This was up from a revised 39,600 in January. Despite the rising cost of borrowing, this was the first monthly increase in approvals for house purchases since August 2022.

Yesterday we also saw the US pending home sales YoY and MoM – the yearly figures fell 21.1% in February, while the monthly figures rose 0.8%, for a third consecutive month.

In technology news, over 1,000 artificial intelligence (AI) experts, researchers and benefactors have come to an immediate halt on the creation of “giant” AIs for at least six months. The decision was made in order to fully study and mitigate the risks and dangers of AI systems. Leader in AI technology, Elon Musk, is one of the many to join the call.

Canadian equities rose on Wednesday for the fourth session in a row as concerns around the North American banking sector continued to ease. The S&P/TSX Composite index climbed by 0.8% and was above the 19,800 level yesterday.

US stocks also boosted yesterday. The Dow gained almost 300 points on Wednesday, while the S&P 500 and Nasdaq 100 rose over 1% each, as concerns about a banking crisis continued to ease.

Michael Barr, the Federal Reserve’s vice chairman for supervision, Michael Barr, said that SVB’s troubles were due to poor risk management, suggesting it could be an isolated case.

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GBP: Hunt refuses to rule out fuel duty hike

While giving evidence to the Treasury Select Committee, chancellor Jeremy hunt said the Bank of England has not ruled out a big fuel duty hike next year. He iterated the treasury “cannot afford to make that change permanent.” We can expect to hear more on the topic in the chancellor’s next fiscal forecast.

GBP/USD over the past year

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EUR: Spanish inflation eases

This morning, data from the National Statistics Institute revealed that Spain’s annual inflation eased from the month before. The preliminary reading fell to 3.3% in March which was the lowest rate since August 2021. It also came in below market expectations of 3.8%.

USD: Pending home sales hit 7-month high

Pending home sales, a leading indicator of economic health in the US, rose 0.8% month-over-month in February. This came after an 8.1% jump in January 2023 and marks the highest level seen since August 2022. Recent figures also beat market forecasts of a 2.3% fall.

Although this would have pleased markets, the US dollar remains weaker than sterling. Against the euro however, the greenback is up by around 0.48% on a weekly basis.

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