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Sterling falters but recovers ahead of retail sales results

23rd March 2017 Market Update

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🇬🇧 GBP – A relatively quiet day for the UK in terms of data, with nothing whatsoever being released. Up until 2pm UK time, the pound fell in value against the dollar and the euro by around half a cent across both pairs. This could be attributed to a natural sell off after this week’s gradual improvement in sterling. This was however short lived and later on into the day, Sterling recovered all lost ground.

In the run up to Article 50 being signed next week, on Wednesday 29th, the pound has been gaining in value. This could be a sign that the markets have warmed to the certainty that an implementation date has given.

Today, Retail Sales figures are to be released at 9:30 am UK time, with the forecast showing that the data will move into positive territory, from -0.3% in February to 0.4% in March.

🇪🇺 EUR – Yesterday, Current Account figures were released for the Eurozone countries, however this figure is not looked at as a high importance piece of data and even though it came out below the expected value, the market did not move.

No data coming out for the Eurozone today.

🇺🇸 USD – Crude Oil inventories were over double the expected value, showing signs of resilience in the oil market. This was not reflected in the rates as there were no movements of the back of this piece of data.

This afternoon, Unemployment claims from the US are set to come in relatively similar to last month’s figure, with Yellen speaking shortly afterwards. This will be her first speech since last week’s interest rate rise. Markets will keep a keen eye in case Yellen gives insight into the Fed’s position moving forward this year.

This week’s dollar weakness has been cited to Trump’s inability to implement his pro business policy, as set out in his campaign and at the beginning of his presidency.

 

Key Announcements

🇬🇧 GBP
Retail sales figures set to improve to 0.4%.

🇺🇸 USD
Unemployment claims set to increase at a similar level as previous, with 240 more claimants forecasted. Yellen speaking at a conference and is expected to address last week’s interest raise.

 

Our View:We expect the pound to strengthen in the run up to Article 50 being signed next week, as it seems investors are welcoming the clarity a date has given.

The dollar may continue to slide if Trump cannot convince markets that his pro business policies can be ratified into law.

 

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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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