Eyes on US CPI, UK Spring Statement

The UK's Spring Statement and the US's February CPI are in focus today.

Previous Day's Market Highlights

Amidst an otherwise largely quiet day, the pound made headway on reports that the UK and EU are nearing a Brexit transition deal. Given the significant uncertainty that Brexit poses, the pound remains highly sensitive to headlines, particularly ahead of key deadlines like next week’s EU Summit. Sterling-euro eyed 1.13, its highest levels since 1 March. Cable again tested 1.39 but struggled to hold that level. Euro-dollar traded sideways around 1.23.
 
The pound rose above 1.90 against the kiwi and 1.78 against the loonie; it moved higher against the Aussie dollar after the rate met support around 1.76. Otherwise limited market movement reflected the quiet calendar day.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1274 1.1399 1.1150 2.18%
GBP/USD 1.3890 1.4150 1.3711 3.10%
EUR/USD 1.2319 1.2556 1.2154 3.20%
GBP/AUD 1.7664 1.7913 1.7574 1.89%
GBP/NZD 1.8981 1.9280 1.8925 1.84%
GBP/CAD 1.7857 1.8051 1.7413 3.53%

Today's Market Highlights

Sterling traders will keep an eye on today’s Spring Statement (12:30 GMT), including the Office for Budget Responsibility’s updated economic forecasts. Unless there are any significant surprises, the impact on sterling may be relatively limited, but lower forecasts could put some pressure on the pound. Any Brexit headlines remain key.
 
In the US, the main release of the day is February CPI (12:30 GMT). While the dollar seems set to remain broadly weak for the time being, a pick-up in the headline figure could see afternoon dollar strength as the release is closely watched ahead of next week’s Fed meeting. According to the CME FedWatch Tool, markets are pricing in an 89% chance that the Fed will hike.
 
BoC Governor Poloz will speak on the labour market this afternoon (14:30 GMT, comments to be released at 14:15).

Today's Economic Calendar

Time Currency Release Consensus Previous
12:30 GBP Spring Statement
12:30 USD CPI YoY (Feb) 2.2% 2.1%
12:30 USD Core CPI YoY (Feb) 1.8% 1.8%
14:30 CAD BoC Governor Poloz Speaks
21:45 NZD Current Account QoQ (Q4) $-2.40B $-4.68B
22:10 AUD RBA Assistant Gov Kent Speaks
23:30 AUD Westpac Consumer Confidence (Mar) -2.3%

Caxton