Euro Zone inflation remains sticky
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Daily Currency Update
Inflation within the Eurozone eased to 2.6% in February, the flash figures showed on Friday. Both the headline and core figures were higher than expected with core inflation coming in at 3.1%, which was 0.2% above the expected figure. The news showed that inflation remains sticky in Europe. Data also on Friday showed US manufacturing printed surprisingly soft numbers. A fall was seen from the previous 49.1 and the expected 49.5, down to 47.7 which contradicted the story told by the bulk of the regional manufacturing reports. The mixed manufacturing messages cloud the outlook ahead of Fed Chair Jerome Powell’s upcoming testimony.GBP/USD has recovered from an early afternoon drop to 1.2600, trading just under 1.2680 at the time of writing. GBP/EUR movement remains range-bound, trading within 20-30 pips. The currency paid opens just above 1.1680. EUR/USD, like Sterling's move against the US dollar, has picked up and we have broken 1.0850 in the past hours.
Key Movers
Macroeconomic data remains subdued at the start of the week, with Wednesday being the first announcement worth noting. The UK releases its annual budget, with tax cuts potentially offering some support to the Pound. However, cuts are expected to be limited under the current climate of the UK economy. On the same day, Fed chair Jerome Powell will testify where it is believed he will double down on the ‘no rush to cut rates’ message. Thursday, Europe will announce its latest interest rate decision. No change is expected from the 4.5% but commentary around the release will be scrutinized for guidance on rate cuts expected later this year. The week will end with jobs data from the US, most notably non-farm payroll data for Friday. This could be a large indicator as to whether the Fed will stick or twist with interest rates in the near future.Expected Ranges
- GBP/USD: 1.2610 - 1.2720 ▲
- GBP/EUR: 1.1660 - 1.1700 ▲
- GBP/AUD: 1.9370 - 1.9510 ▲
- EUR/USD: 1.0810 - 1.0890 ▲