Sterling sure and steady today

17th March 2017 Market Update

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?? GBP - In the wake of the US raising interest rates the pound pounced on the opportunity to push higher against the dollar and continued to spread the love to the euro come the afternoon.

The BoE elected to keep the interest rate in the UK at the record low of 0.25% and the quantitative easing programme also remained the same. The big news however was that it was not a unanimous vote on interest rates. The lone dissenter was Kristin Forbes. When reflecting on her choice it was mentioned that if growth remains solid and inflation continues to accelerate then rates should rise soon.

The pound experienced gains of well over 1% across the board. This was also bolstered by the Queen formally approving the law to trigger Article 50 and Prime Minister May showed a firm stance on a second Scottish referendum stating “now is not the time” after vowing to block any referendum in the next two years.

No data is expected from the UK today and we have already seen the pound drop around 0.5% on what looks like profit taking by investors.

?? EUR - Eurozone inflation remained at the bloc's target of 2%. This, along with the Dutch election result, would usually be great news for the euro. Both pieces were overlooked due to the BoE and Fed announcements however.

Today only the trade balance for Europe is due, there is no consensus on the outcome, normally this has little effect.

?? USD - The dollar did lose some ground to the euro in the early hours but the moves rectified themselves by the time the UK open. Very little data released yesterday, only building permits and housing starts both of which were very close to what was expected and therefore had little effect.

Michigan consumer confidence is expected to rise this afternoon significantly this is moving towards 100 which would be its highest level ever.

 

Key Announcements

?? EUR
10.00AM – Trade Balance.

?? USD
4.00PM – Michigan Consumer Confidence.

 

Our View:After a volatile week, today is expected to be pretty flat. With the triggering of Article 50 likely to be next week, it will be interesting to see how the market reacts.

 

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