Service data held headlines yesterday
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Daily Currency Update
Services data held the headlines yesterday with releases from across Europe, the UK, and the US. Spain and Italy remained above 50.0, which is the gauge between expansion and contraction while France and Germany were below this figure but saw improvement against the previous release and forecast. These releases showed the Eurozone economy moved closer to stabilization in February as the service sector pushed into growth. The UK and the US both missed the forecast. The UK did maintain its service sector output growth in February with an increase in business activity, stronger new order growth, and aided by a modest rise in employment numbers. The US painted a mixed picture with business activity and new order improving, however employment was particularly soft. The GBP and EUR have both pushed higher against the USD yesterday touching 1.2730 and 1.0870 respectively. GBP/EUR moved higher also but remained within the recent ranges – 1.0710 at the highs.Key Movers
Today starts the week from a macroeconomic perspective, as we await the Spring budget from the UK and Fed chair Powell testifying. The latter of the two will likely have a greater impact on the currency market, but previous budgets from the UK have seen GBP volatility. Small and contained tax cuts are expected, but any deviation from this could see Sterling break recent ranges against both the EUR and USD. Powell begins to testify today, but his speech will run over two days. An update on the US economy is expected with Powell underlining that the Fed will wait for more data before making any rate cuts. Market participants have now started to price in that the central bank will start cutting rates in June, but any comments that suggest it will be earlier or later will add to volatility in the USD.Expected Ranges
- GBP/USD: 1.2610 - 1.2840 ▲
- GBP/EUR: 1.1620 - 1.1750 ▲
- GBP/AUD: 1.9360 - 1.9710 ▲
- EUR/USD: 1.0840 - 1.0890 ▲