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Yesterday, both the pound and euro were boosted against the dollar due to weak economic data from the US
Sterling gained 0.85% against the US dollar yesterday and is currently trading 1.5% higher than this time last week. It’s believed sterling’s gains are down to an ill-performing dollar as traders are more optimistic about a brighter UK economic outlook.
The pound also made gains of over 0.5% against the euro but struggled to maintain them into Tuesday afternoon. The pound is currently up 0.3% on the week and close to 1% on the month.
Huw Pill, chief economist at the Bank of England spoke out yesterday on inflation. He said, “On balance, the onus remains on ensuring enough monetary tightening is delivered to ‘see the job through’ and sustainably return inflation to target.”
Amid oil price surges recorded earlier in the week, the CEO of the United Arab Emirates’ national oil company, Adnoc, has been controversially appointed president of the United Nation’s Cop28 summit that the UAE is due to host in December.
On the data front, yesterday markets heard US job openings fell close to a two-year low of 9.9 million in February. This was below expectations of 10.4 million.
Following this, US stocks wobbled following further data from US factory orders, which fell for the second consecutive month. This decline suggests the US economy could be cooling amid higher interest rates.
Yesterday we heard the Euro Zone’s month-on-month PPI dropped by 0.5% from a month earlier, exceeding market expectations of a 0.3% decrease. The year-on-year data eased to 13.2%, down from a revised 15.1% in January.
This morning economists heard German factory orders rose to 4.8% in February. This is the biggest jump month-over-month since June 2023 and exceeded forecasts of a 0.3% gain. This marks the third month of gains led by a 55% surge in vehicle orders.
There’s a flurry of UK data this morning with new car sales just after 9 am and the services and composite PMI (final) for March which is expected to increase from 53.3 in February to 52.8 in March.
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GBP: pound hit a 10-month high
Yesterday sterling hit a 10-month high against the US dollar. It’s believed to have been fuelled by weak US data and a data-led approach to policy changes from the Bank of England. This reflects a positive start to the year for the pound, having outperformed its major currency rivals in the first quarter.
GBP/USD: the past year
EUR: euro hits 8-week high against the dollar
The euro bounced back against the US dollar yesterday morning, hovering around its strongest level in two months. This comes after a 1.6% gain last month. The EUR/USD rate is currently trading close to 3% higher than it was this time last month.
USD: Market watchers await balance of trade
At 1:30 pm today (UK time) market watchers will receive the latest trade deficit data for the US. The last recording came in at -$68.29 billion in January and economists expect the deficit to widen to $68.3bn.
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