Major economic data releases helping the Pound, and causing disruption for other major currencies
This week we have seen the Pound benefit from several economic data releases, surprising the market with more positive than expected readings, as well as some weaker data coming out of the European bloc.
The Purchasing Manager’s Index reading, which is a great indicator of the UK services sector’s economic position, posted above 50 to signal that this sector is now expanding in the latest month, as well as the manufacturing and composite sectors releasing positive data too.
The GBPEUR rate now sits at 1.135 at time of writing, reaching 1.1382 at the highest point and 1.8cents higher than the lows of the week, and GBPUSD up from 1.192 to 1.213.
The Bank of England had previously almost guaranteed a UK recession for 2023 but, couple these releases with the positive Retail Sales figures from the previous week, that stance may begin to change in the weeks to come.
As mentioned above, we have seen the Euro lose ground this week against major currencies, losing nearly 2 cents on the Pound and just over 1 to the greenback, bringing the EURUSD rate to 1.059 at time of writing.
After the Consumer Price Index released displaying that inflation was decreasing at a quicker than expected pace, there were doubts within the market that the European Central Bank could keep up with its bullish stance in terms of its monetary policy, previously signalling another 50 basis point hike at the next meeting in March.
This week’s release of services data might support those doubts as the Manufacturing PMI data released lower than expected at 48.5, and this reading gives us an indication of the overall economic condition of the bloc as the manufacturing sector takes up the majority of the Gross Domestic Product reading.
The next monetary policy meeting for the ECB will take place on the 16th March and any announcements from officials along the way will give us a better idea of what to expect moving forward.
US Dollar News
The US Dollar has also benefitted from recent surprise reading in economic data releases, which has caused a slight U-turn on expectation of their monetary policy.
The expectation was for the Federal Reserve to slow down interest rate hikes in the coming months as inflation continues to slide, and start to cut them by the end of the year.
Recently, we have seen the inflation slowing at much slower pace than expected, recently release was 0.2% higher than the expected reading, as well as the Non-farm payrolls/labour data displaying 330,000 more new jobs than the market priced in for.
This week saw positive PMI releases across the board to support this further, so could we see the Fed change their stance at their next monetary policy the week after the ECB have doubts over their decision?
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