Pound and euro hold gains as banking fears recede
Wednesday 29 March, 2023
Daily Currency UpdateBank of England Governor Andrew Bailey spoke yesterday morning before the Treasury Select Committee and reassured MPs that the UK banking sector was not under stress despite several international lenders collapsing over recent weeks. Although a far cry from the 2008 banking crisis, March has seen several overseas lenders fail under the pressure of increased borrowing costs. Despite a warning that markets appear to be going through a period of heightened tension, Bailey was confident that rules implemented since the Financial Crisis would ensure UK banks rode out the mini storm, we have found ourselves in. Stock markets seem to be much calmer this week with all major exchanges again in positive territory this morning which is helping support the pound. There is no top-tier data from the UK for the rest of the week so market sentiment and international events will likely direct the sterling's direction. GBP/USD is trading above the 1.23 level with GBP/EUR just under 1.14.
Key MoversThe euro has regained some poise this week recouping the losses seen on Friday when panic engulfed the European banking sector sending the shared currency lower. EUR/USD is back up above 1.08 and like the sterling, the euro is being buoyed by improving market sentiment, especially the recovery in the share price of some German banks including Deutsche Bank and Commerzbank. It’s a quiet day for the bloc with the next major data tomorrow morning’s German inflation number with the eurozone as a whole March estimate due on Friday. From the US there was an upward surprise in CB Consumer Confidence which was released yesterday. The survey of around 3000 households by The Conference Board Inc printed 104.2 when 101 was predicted. The report stated "while consumers feel a bit more confident about what’s ahead, they are slightly less optimistic about the current landscape. The share of consumers saying jobs are ‘plentiful’ fell, while the share of those saying jobs are ‘not so plentiful’ rose." Today sees US Pending Home Sales numbers due at 3 pm. This week’s big event will be Friday’s Personal Consumption Expenditure number from the US which will likely move rates a fair bit should there be much deviation from the modest fall that is expected. EUR/USD currently sits at around 1.0835.
- GBP/USD: 1.2270 - 1.2400 ▲
- GBP/EUR: 1.1310 - 1.1430 ▲
- GBP/AUD: 1.8345 - 1.8510 ▲
- EUR/USD: 1.0760 - 1.0880 ▲