Sterling fell yesterday after weaker than forecast economic data cast further doubts over the 4+ rate rises already priced in for 2022. The currency was also not helped by a wave of broad negative market sentiment caused by the rising geo-political situation in Ukraine. Data out from the key UK Services sector which makes up over 80% of the economy, continued to show a slowdown and markets were quick to sell the pound in reaction, falling to new lows for the year against the dollar and euro. With no further Tier 1 economic data scheduled for this week, we expect the currency to be hostage to wider market moves and political news surrounding “partygate”.
No economic data scheduled.
The euro had another quiet trading session yesterday as news elsewhere captivated the market's attention. With mixed messaging starting to emerge from within the ECB the currency has held up well in the face of a surging US dollar, hitting a fresh 2022 high against the pound. With a quiet economic calendar ahead this week the single currency will likely be driven by geo-political news and broader market themes.
09:00: German IFO data.
The dollar rally continued yesterday, fuelled by a combination of rising Bond Yields and news of President Biden readying 8,000 troops in light of rising Russia/Ukraine tensions. A number of Tier 1 investment banks have now raised their forecasts for the dollar along with their rate hike expectations for this year. The US Federal Reserve begins its 2-day rate-setting meeting today, with some market participants raising the prospect that the Central Bank may have to hike rates more than the forecast 0.25% in March, and raised the possibility of a move in rates at every FOMC meeting this year.
15:00: US consumer confidence.
Today's Interbank Rates at 07:36am against sterling movement vs yesterday.