pile of pound coins

Article 50 to be triggered by end of March

15th March 2017 Market Update

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🇬🇧 GBP – The pound started off yesterday on the back foot, dipping to fresh lows across the board. However, with Theresa May disappointing the Press, who had hoped that Article 50 might be triggered yesterday, she affirmed that she is sticking to her schedule of the end of the month. Sterling rebounded somewhat. The movement was hardly seismic, but any current session where the pound doesn’t fall could be taken as a minor triumph.

There was no data out yesterday, whilst today sees Average Earnings data and the latest Unemployment Rate. With the furore surrounding Brexit and Scotland, it may well be that the figures slip through largely unnoticed.

🇪🇺 EUR – The euro had a quiet day, with little rhetoric from the bloc. German inflation figures came in exactly as expected, whilst industrial production data was disappointing. However, this did little to move the currency.

Today sees France’s turn to post inflation data but, again, this will likely have little effect in the currency markets.

It’s also election day in the Netherlands. Results are expected in the early hours of tomorrow morning and current consensus seems to be that no party is likely to win a majority, meaning it may take several weeks for a coalition to be formed.

🇺🇸 USD – The dollar remains strong and shows no signs of imminent weakness. With an interest rate rise widely anticipated later today there may be scope for further gains, although some analysts have commented that the rate hike has largely been priced in already. The FED decision is due this evening, along with the Monetary Policy Statement and FOMC Press Conference.

There was no significant US data out yesterday, in contrast to today, which sees markets look forward to significant fundamentals, in addition to the evening’s excitement. Inflation figures are due for February and this data is expected to show a small improvement from previous. Any extra upside could further strengthen the greenback, while negative readings will likely be shrugged off. Also due later is February’s retail sales reading, which is actually forecast to come in 0.3% down on previous. Again, only significant deviation is likely to move the currency.

 

Key Announcements

🇬🇧 GBP
09.30 – Average Earnings 3Mo/Yr (Jan).
09.30 – ILO Unemployment Rate (Feb).

🇪🇺 EUR
08.00 – French Consumer Price Index (Feb).

🇺🇸 USD
12.30 – Consumer Price Index YoY (Feb).
12.30 – Retail Sales MoM (Feb).
18.00 – FOMC Economic Projections.
18.00 – Fed Interest Rate Decision.
18.00 – Fed Monetary Policy Statement.
18.30 – FOMC Press Conference.

 

Our View:The big news is the US interest rate decision but as mentioned, markets are anticipating a hike. It will only get interesting, we suspect, if they don’t raise rates, which could well see dollar losses. However, it’s fair to say that the greenback looks bulletproof.
 
Unfortunately, the same cannot be said for Sterling. It really is at the mercy of Brexit shenanigans and until investors are given a clear picture of what the economy will look like after leaving, it is entirely possible that the pound will languish where it is, or even lower.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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