Pound Ends March Higher

Sterling ended March higher against both the euro and the dollar. UK Manufacturing PMI and US Fed speakers are in focus today.

Previous Day's Market Highlights

It was a quiet day ahead of the long weekend as exchange rates saw limited movement given a fairly light data calendar and lack of surprises. The pound remained above 1.14 against the euro at some of the rate’s best levels since early February. Sterling-dollargave up ground but held above 1.40, while euro-dollar struggled to break below 1.23.
 
As for the day’s economic releases, UK GDP was unrevised at 0.4% as expected, while Germany’s Harmonised Index of Consumer Prices rose less than forecast and US Core PCE rose to 1.6%, in line with expectations. The Canadian dollar briefly fell on a 0.1% contraction in monthly GDP.
 
With one year to go until the UK leaves the EU, March proved a positive month for sterling. The pound benefited from rising expectations of a May BoE rate hike and a Brexit transition period agreement, which eliminated some degree of uncertainty around the Brexit process (although plenty remains). At the same time, the dollar has been under pressure on rising trade war concerns, particularly between the US and China. This has seen the pound end the month approximately 2% higher against the dollar and 1% higher against the euro.   

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1419 1.1538 1.1150 3.36%
GBP/USD 1.4072 1.4245 1.3781 3.26%
EUR/USD 1.2323 1.2477 1.2239 1.91%
GBP/AUD 1.8264 1.8509 1.7599 4.92%
GBP/NZD 1.9380 1.9644 1.8925 3.66%
GBP/CAD 1.8118 1.8417 1.7726 3.75%

Today's Market Highlights

The April calendar gets off to a relatively quiet start today with UK Manufacturing PMI out at 09:30 BST. A dip in the index could weigh on the pound but may overall have a relatively limited effect. Investors will keep an eye out for any monetary policy hints in Fed speeches this afternoon from the typically dovish Kashkari and from Brainard, who will be speaking on financial stability.
 
Looking ahead to the rest of the week, the main releases are the preliminary estimate of March Eurozone CPI, a pickup in which could strengthen the euro ahead of the ECB’s meeting on the 26th, and the US’s March jobs report. A reasonably strong Nonfarm Payrolls figure and, more importantly, a gain in average wages could see a stronger dollar as the week draws to a close on Friday.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Markit Manufacturing PMI (Mar) 54.7 55.2
14:30 USD Fed's Kashkari Speaks
NZD Global Dairy Trade Price Index -1.2%
21:30 USD Fed's Brainard Speaks
02:30 AUD Retail Sales s.a. MoM (Feb) 0.3% 0.1%
02:30 AUD Building Permits MoM (Feb) -5.0% 17.1%
02:45 CNY Caixin Services PMI (Mar) 54.5 54.2

Caxton