Key Week for GBP

In addition to Wednesday's Fed decision, UK data, the BoE, and the EU Summit are in focus.

Previous Day's Market Highlights

Sterling continued inching higher on hopes of an EU transition deal ahead of the EU Summit on 22 to 23 March, while the euro was softer after headline February inflation in the Eurozone was revised down to 1.1% from 1.2%. This saw sterling-euro hold above 1.13 and make progress towards the upper end of its four-week range.
 
The dollar regrouped, pushing back below 1.39 against the pound and 1.23 against the euro to its strongest levels since Tuesday and 2 March, respectively. The dollar was also supported by above-forecast Industrial Production and Capacity Utilization readings, although earlier housing figures disappointed.
 
The Aussie and kiwi dollars were sold off. Sterling-Aussie broke above first 1.80 and then 1.81 for the first time since late June 2016, while sterling-kiwi regained 1.93 for the first time since 9 February. Sterling-Canadian dollar met resistance ahead of 1.83 and continues to trade at its highest levels since the referendum.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1350 1.1399 1.1150 2.18%
GBP/USD 1.3923 1.4070 1.3711 2.55%
EUR/USD 1.2267 1.2447 1.2154 2.35%
GBP/AUD 1.8086 1.8107 1.7599 2.81%
GBP/NZD 1.9324 1.9342 1.8904 2.26%
GBP/CAD 1.8255 1.8293 1.7547 4.08%

Today's Market Highlights

The calendar is fairly light today ahead of a busier week. The Eurozone Trade Balance is expected to show a smaller surplus in January (10:00 GMT), while the Fed’s Bosticspeaks on Community Development (13:40 GMT). Monetary policy comments should not be expected ahead of the Fed’s meeting on Wednesday, at which the Fed is widely expected to raise interest rates by 25 basis points.  

This is set to be a key week for the pound with politics, economic data, and monetary policy in focus. Notable sterling macroeconomic indicators to be released this week include CPIemployment and wage, and Retail Sales figures. Recent Brexit negotiations will come to a head as EU leaders meet from Thursday for the March summit, the preferred deadline for ironing out a transition deal so that talks can formally turn to trade.

Also on Thursday, the Bank of England will announce its latest policy decisions. While no changes to interest rates are expected this month, investors will be watching closely for any clues that May is in play after recent hawkish comments brought forward rate hike expectations. Brexit progress and a hawkish bank could see sterling strength this week, but both events pose risks.  

Today's Economic Calendar

Time Currency Release Consensus Previous
24hr ALL G20 Meetings
10:00 EUR Eurozone Trade Balance s.a. (Jan) €22.5B €23.8B
13:40 USD Fed's Bostic Speaks
18:00 EUR ECB's Mersch Speaks
21:00 NZD Westpact Consumer Survey (Q1) 107.4
00:30 AUD House Price Index QoQ (Q4) 0.0% -0.2%
00:30 AUD RBA Meeting Minutes

Caxton