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The US economy grew by 3.2% in the last quarter of 2023.
Sterling lost around 0.15% to the euro on Wednesday while recovering to finish the day unchanged against the US dollar. EUR/USD also mounted an afternoon fightback after the release of US data.
US GDP growth for the final quarter of 2023 was revised down from an initial 3.3% to 3.2% yesterday. That one percentage point downgrade didn’t tank the US dollar so much as give it a light puncture. The euro and the pound both rose slightly, but the moves weren’t much to write home about.
Next week features two big economic set pieces: the UK budget and the latest interest rate decision from the European Central Bank (ECB). The pound should be able to avoid any big losses stemming from the budget, provided the chancellor sticks to fiscal orthodoxy while he’s waving his red briefcase around, analysts at Rabobank said.
For the ECB, there’s little indication that the headline rate will be shifted from its current 4.5%. Of course, you can never say never in currency markets, and central bankers will be looking eagle-eyed at the various inflation reads coming in over the next few days.
Consumer confidence in the eurozone remained at -15.5 in February, but the real story was in the economic sentiment survey. Sentiment fell to 95.4 this month, down from January’s 96.1 and undershooting expectations of an increase to 96.8.
Turning our attention down under, the Australian CPI (Consumer Price Index) came in at 3.4% in January, level with last month but below expectations of 3.6%. Transport prices, motor fuel and new house prices were the biggest drivers of the fall. The news comes to the surprise of many who thought Australia may soon buck the trend of reduced interest rates and actually raise the cost of lending. The Australian dollar lost almost one per cent to the pound, the euro and the US dollar on the back of the news.
The UK government is currently exploring ways it can sell its stake in Natwest. According to The Guardian, the government is now discussing ways it can sell shares to retail investors through major online stock brokerages.
The price of Bitcoin burst through the $60,000 barrier for the first time since 2021. The cryptocurrency is up by 36% since the start of the year, following the SEC’s decision to allow the trading of Bitcoin ETFs.
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GBP: Listlessly drifting
Sterling has spent this week drifting for the most part. There hasn’t been much data to boost or dent the pound, while next week’s budget continues to occupy the thoughts of many.
GBP/USD: the past year
EUR: Data threatens stability
The euro has found some respite in recent weeks, stabilising and even advancing slightly against its major rivals. A slew of inflation data from today threatens this fragile situation, as does next week’s interest rate decision from the European Central Bank.
GBP/EUR: the past year
USD: PCE hits three-year low
Despite increasing by more than estimates (1.7%) the US Personal Cosumption Expenditure (PCE) index, which tracks the weighted cost of living for US households, increased by just 1.8% in the fourth quarter of 2023, the weakest growth since 2020.
USD/EUR: the past year
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