GBP / EUR Holds 1.13

GBP picked up and held onto gains above €1.13. Euro CPI, US data, and political headlines are in focus.

Previous Day's Market Highlights

The pound pushed forwards yesterday, receiving general support from hopes of a transition deal, and reclaimed 1.13 against the euro to hit its highest levels since 28 February. A softer euro saw euro-dollar inch lower towards 1.2300, while sterling-dollarfluctuated within the familiar 1.39 bracket as it continued to meet resistance ahead of 1.3990.
 
The pound rose above 1.82 against the Canadian dollar for the first time since the referendum and is now trading around pre-referendum lows. The rate has recovered nearly 16% from its January 2017 lows below 1.60.

The economic calendar was relatively quiet yesterday. US Initial Jobless Claims fell to 226K from 230K; a reading below 300K is consistent with an improving labour market.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1315 1.1399 1.1150 2.18%
GBP/USD 1.3939 1.4150 1.3711 3.10%
EUR/USD 1.2318 1.2556 1.2154 3.20%
GBP/AUD 1.7882 1.7914 1.7599 1.76%
GBP/NZD 1.9204 1.9280 1.8904 1.95%
GBP/CAD 1.8212 1.8243 1.7533 3.89%

Today's Market Highlights

Up first today is the final estimate of February CPI in the Eurozone (10:00 GMT). Data are expected to be unrevised and show that headline inflation slowed to 1.2% and core inflation held at 1.0%. As inflation figures are in particular focus after the ECB removed its easing bias last week, any revisions could see a knee-jerk euro reaction; otherwise, any impact may be limited.
 
In the afternoon, mixed US data are projected. Softer housing data (12:30 GMT) and Consumer Sentiment (14:00 GMT) could put pressure on the dollar, while an expected pick-up in Industrial Production and Capacity Utilization (13:15 GMT) could ultimately see a firmer tone as the week draws to a close. Political headlines remain key for both the dollar and the pound, and continued hopes of a Brexit transition deal may see additional sterling strength.
 
Next week is set to be a busier one with UK CPI and employment data, a likely rate hike from the US Fed, the Bank of England meeting, and the EU Summit all on the agenda. Greater volatility could be seen next week, particularly off the back of political headlines, as Trump’s administration changes and Brexit transition period negotiations remain in focus.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00 EUR Final CPI YoY (Feb) 1.2% 1.2%
10:00 EUR Final Core CPI YoY (Feb) 1.0% 1.0%
12:30 USD Housing Starts MoM (Feb) 1.280M 1.326M
12:30 USD ECB's Lautenschlager Speaks 1.320M 1.377M
12:30 CAD Foreign Securities Purchases (Jan) $-1.97B
13:15 USD Industrial Production MoM (Feb) 0.3% -0.1%
14:00 USD Michigan Consumer Sentiment Index (Mar) 99.3 99.7

Caxton