Currency Note

UK public spending deficit increased in March

By Alex Bennett April 25th, 2023

After a quiet day on the UK data front yesterday, we’ve just seen the latest public sector net borrowing data released this morning. According to the Office for National Statistics (ONS), the UK public sector posted a £20.71bn deficit in March this year.

Sterling has not yet made any knee-jerk reactions to the data however, many will be keeping a close eye on the pound’s performance against its peers over the course of today.

Across the pond, the Swiss franc made positive moves against the dollar yesterday, entering the last week of April at its strongest levels in over two years.

Movements on Wall Street remained largely unchanged over the course of yesterday, with all three major US stock indexes beginning Monday’s trading session virtually flat. This comes as investors show more hesitancy to make any sudden moves ahead of the slew of tech and economic data scheduled to hit markets at the tail end of this week.

The spotlight will be on the US this Thursday, as the Bureau of Economic Analysis will release America’s latest Advance GDP data (quarter on quarter).

There are 3 kinds of GDP reports markets look out for: advance (having the most impact), preliminary, and final (having the least).

Signs that the UK’s cost of living crisis continues to impact UK consumers and businesses manifested in yesterday’s announcement of Prezzo outlet closures across the UK. The Italian restaurant chain has announced plans to close 46 outlets in the UK. Approximately 810 jobs will be put at risk if the chain goes ahead.

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GBP: BoE’s Broadbent to deliver speech

The Bank of England’s deputy governor, Ben Broadbent will deliver a speech at 10am this morning on the relationship between money and economic activity.

Broadbent is also a member of the BoE’s Monetary Policy Committee, so many will be listening closely for any hawkish comments which could potentially move the pound.

GBP/USD over the past year

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EUR: Several ECB speeches scheduled in

Market watchers will hear four speeches from various members of the European Central Bank’s (ECB’s) governing council over the course of tomorrow. The first will be from chair of the supervisory board, Andrea Enria, at 8:30am and the last will be from supervisory board member Anneli Tuominen at 2:45pm UK time.

Although the ECB’s next interest rate decision isn’t until 4th May, many will be listening closely for any hawkish comments tomorrow as these too have the potential to impact the single currency.

USD: All eyes on unemployment data

Investors will have plenty on their plate on Thursday when it comes to US data.

As well as GDP, markets will gain an insight into America’s economic health, with the latest unemployment claims. Many will be keen to see if numbers hit, or fall below, forecasts as this type of result tends to be good for the US dollar.

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