Monthly Archives: April 2024

Markets look to this afternoon for the first major economic release of the week. The European Consumer Confidence Index is set to be announced at 15:00.

With the lack of economic releases today, attention will turn to Tuesday’s data. There is a handful of Purchase Manager Index releases across Europe and the UK tomorrow morning.

For the US the key releases of the week are expected with New Home Sales, markets are forecasting a rise of 8k month on month. Followed by the release of employment and gross domestic product, the latter is expected to show a decline to 2.1% (from 3.3%).

On the currency front, the pound has taken a massive hit following Friday evening’s speech from Bank of England Governor Bailey.

The pound/euro rate has fallen 100 points off the back of the speech, as for the pound/dollar rate this is sitting at its lowest rate since November 2023.

This morning we have the G20 meeting, Investors will keep a close eye on the comments from central bankers to see if they create any market volatility.

In the US unemployment claims is expected to come in at 215k. Existing home sales is forecast to fall in March to 4.2 million as mortgage rates remain high and house prices surge in the States.

Yesterday, UK CPI inflation rose to 3.2 percent in March, beating market expectations (3.1 percent). GBPEUR initially rose to a two month high following the inflation reading, however has since lost its gains.

The pound has struggled against the Dollar over the course of the last week. US CPI data has reinforced the Federal Reserve’s decision to maintain current interest rates as long as necessary to bring inflation down to their target rate of 2 percent.

Markets will shift their attention to tomorrow, UK retail sales are expected to rise in March, with this year’s early Easter helping to boost the data.

The governor of the Bank of England has indicated that the UK is still on track for an interest rate cut, as official numbers show a further slowing in the pace of price growth in the economy.

The Office for National Statistics (ONS) disclosed that the consumer prices index (CPI) measure of inflation fell to 3.2% in the year to March, the lowest level in two and a half years. That was lower than the 3.4% figure recorded the previous month, but slightly more than many expected.

This morning’s Eurozone March CPI inflation figures will be the final publication and are expected to corroborate the ‘flash’ estimate. The initial estimate indicated a decline of 2.4%.

Progress in inflation and sluggish growth have enabled the ECB to hint that a first rate decrease in June is still possible, maybe earlier than the BoE or the Fed.

This morning’s minor upward surprise in UK inflation provided some support for the pound and helped it erase some of its previous declines against a generally higher dollar.

Retail sales are the main release today. The US report is expected to come in on the downside this afternoon, falling to 0.3% from 0.6%.

Looking ahead this week, the first major data for the UK is the employment figures which is due to be released on Tuesday morning.

Markets are forecasting growth in the ILO Unemployment rate, albeit only a small rise to 4% (from 3.9%). Employment releases are a key indicator for the current state of the UK economy.

Following this, Bank of England Governor Bailey will be speaking at 18:00. It is likely that rate cuts will be the major talking point.

Wednesday sees the release of inflation figures for the UK, where a fall of 0.3% to 3.1% is what markets are currently forecasting.

With the UK dominating markets this week, the pound could show some volatility against the major currency pairings.

On the currency front, the pound continued its heavy decline against the dollar last week. It is now at its lowest level since November last year.

For the pound to euro rate, it continues to sit around this years yearly average.

As expected, the ECB maintained its monetary stance yesterday. However, the meeting statement underlined that if the ECB’s updated assessment of the inflation outlook offers it more confidence that underlying inflation is approaching its 2% target. 

President Lagarde stated, that the ECB is not “pre-committing to a particular rate path.”. However, the impact of the ECB meeting on market rate expectations was somewhat muted.

The British Pound was broadly supported after the ONS said the UK economy grew in February and revised its initial estimate for January’s growth earlier this morning.

The pound to euro exchange rate rebounded to the 1.17 level after it was revealed that the UK economy gained 0.1% month on month in February, with January’s number revised up to 0.3% from 0.2%.

Pound to Dollar exchange rate remains weak in the face of the larger U.S. dollar surge that has driven FX activity since the release of positive U.S. labour market and inflation statistics yesterday.

Looking ahead to today, the main highlight will be the preliminary reading of US consumer sentiment for April. Barring any major surprises, though, the data is unlikely to affect the dollar.