13th March 2018- Cautious optimism surrounding a potential deal at next week’s EU Summit helped support Sterling

 

     

Cautious optimism surrounding a potential deal at next week’s EU Summit helped support Sterling

Major currencies were held in narrow ranges during Monday amid a lack of fresh major factors while the dollar drifted. EUR/USD found support below 1.2300 as subdued wages growth from Friday’s employment report continued to limit US support.

US equities traded slightly lower amid caution ahead of the latest US CPI inflation data due on Tuesday with Asian equities outside Japan also edging weaker amid concerns surrounding tighter credit conditions.

Oil prices moved lower as increasing US output continued to unsettle sentiment while gold was held in tight ranges.

There was a cautious optimism surrounding a potential transition deal at next week’s EU Summit which helped support Sterling, especially with a solid tone in risk appetite. In addition, there was a small narrowing of yield spreads compared with German and US bonds which helped underpin the UK currency.

Markets were expecting Chancellor Hammond to lower budget deficit forecasts in Tuesday’s Spring budget update with little likelihood of any significant policy announcements given that the main focus has switched to the Autumn.

As far as monetary policy is concerned, futures markets are pricing in around a 70% chance of a rate hike in May, but with concerns that failure to secure a transition deal this month would deter a Bank of England move.

GBP/EUR rallied to the 1.1300 area after finding support close to 1.1235. GBP/USD advanced as the US currency moved lower, although there was further selling interest above 1.3900 with consolidation just below this level on Tuesday.

     
 
       
 

GBP/EUR 

– 1.1273

 
 

GBP/USD

– 1.3890

 
 

GBP/CHF 

– 1.3175

 
 

GBP/JPY 

– 148.5

 
 

GBP/AUD 

– 1.7650

 
 

GBP/NZD 

– 1.8973

 
 

GBP/CAD

– 1.7849

 
 

GBP/ZAR 

– 16.4479

 
 

GBP/NOK 

– 10.7723

 
 

GBP/SEK 

– 11.4527

 
 

EUR/USD 

– 1.2316

 
       
  All rates are indicative of interbank rates*  
       
 
 

GBP/EUR

 
 

GBP/USD 

 
 

EUR/USD 

 
       
 
   

10:00 EUR

German ZEW Survey (Economic Sentiment)

-

17.8

 
   

12:30 USD

US CPI (Y/Y)

2.10%

2.10%

 
   

12:30 USD

US CPI Ex Food & Energy (Y/Y)

1.80%

1.80%

 
   

14:30 CAD

BoC Gov Poloz Speaks

-

-

 
 
   
 
 
*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time.  CentralFX are not responsible for the rates shown.
 
 
 

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