17th April 2019 Market Update
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🇬🇧 GBP – Every April for more than a decade sterling has gained versus the dollar due to dividend distributions to British shareholders foreign companies as well as other investment flows to start of a new financial year. The last two years, however, have bucked this trend due to the ongoing Brexit fears, with movement this month barely negligible. Indeed, a lot of the institutional firms in the market have been quoted in saying that they are reluctant to back the pound now due to Brexit and election risk.
On the data front unemployment fell by 27,000 in the three months to February whilst the actual unemployment rate remained at 3.9% and wage growth remained at 3.4%. Whilst this is all overall positive for the UK economy, sterling dropped yesterday over reports that talks between Labour and the government had broken down, although this was rebuffed shortly after.
In focus today will be inflation data which economists are predicting an uptick to 2% in March up from 1.9% in February.
🇪🇺 EUR – The ZEW indicator of economic sentiment rose to 3.1 points when released yesterday. This was the first time since March last year that gauge has moved in to positive territory. This poll placed together by the Mannheim-based think tank suggests that the German economy may finally be moving past the cloud which has been hanging over the economy in recent months. The euro strengthened marginally in response to this.
Today inflation figures are being released from Europe. This is expected to come out in line with the last month’s readings. These levels are below the ECB’s targets of 2% and suggests low levels of inflation is deterring the ECB from increasing interest rates.
🇺🇸 USD – Industrial production was worse than expected at -0.1%, coming out below market’s expectations. However, this had very little impact on the exchange rates. There is very little data out from the US today with the only thing of note the US trade balance and final wholesale inventories. Both readings are forecast to be worse than previous. FOMC member Bullard is speaking this evening at Bard College, however it is unlikely the dollar will move in response.
GBP: Sterling demand still low ahead of inflation data
EUR: Markets remain euro positive following ZEW survey
USD: Industrial production drops
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