Pound and euro hold gains ahead of tomorrows key inflation data
Thursday 30 March, 2023
Daily Currency UpdateGBP/USD has traded in a relatively narrow range in the past 24 hours with no top-tier data of note from the UK. Monetary Policy Member Catherine Mann spoke in Manchester yesterday evening and emphasized the difficulty the Bank of England was facing regarding inflation and interest rate decisions. She highlighted that even though energy costs were sliding other components especially in the service sector were starting to see prices rise. If you throw into the mix the banking collapses we have seen in March on the back of aggressive rate hikes to fight rising prices many will be hoping inflation resumes its downward trend when UK CPI is next published on April 19th. With stock markets in positive territory as the recent banking turmoil continues to calm GBP/USD has managed to hold above the 1.23 level with it currently around 1.2350. GBP/EUR has also been rangebound with it trading just below 1.14.
Key MoversAhead of tomorrow’s eurozone inflation data, we have CPI from Spain and Germany being released today. Spain's rate of inflation has tumbled from 6% to 3.3% with Germany's reading due later. Germany releases its inflation data state by state and then an overall number is published at 1 pm. This is expected to drop from 9.3% to 7.5%. Tomorrow’s overall reading for the bloc as a whole is due to show CPI falling to its lowest level in a year (7.1%) however eyes be more focused on the core number which strips out the cost of food and fuel. This is predicted to rise a touch to 5.7% y/y. Policymakers at the European Central Bank and consumers alike will be hoping this actually sees a fall to help ease the consumer spending squeeze most major economies are experiencing at present. From the States, we have the final reading of GDP due at lunchtime with no change from the previous 2.7% y/y expected. We also have Unemployment Claims which are expected to show 196k people filed for unemployment insurance last week. Tomorrow's Personal Consumption Expenditure figures from the US could cause some market volatility. Last month’s unexpected rise led Federal Reserve Chairman, Jay Powell to warn policymakers in Washington that higher rates were needed to combat inflation which will have acted as a contributing factor to the banking turmoil seen in recent weeks. EUR/USD has been pretty stable over the past 24 hours with it currently around 1.0850. We could see some whipsawing tomorrow however depending on how the aforementioned inflation numbers print.
- GBP/USD: 1.2270 - 1.2400 ▲
- GBP/EUR: 1.1280 - 1.1410 ▼
- GBP/AUD: 1.8340 - 1.8510 ▼
- EUR/USD: 1.0770 - 1.0910 ▲