Data provides further confidence for Sterling

GBP

The UK unemployment rate held at 3.8% in the three months to December which was in line with expectations, but there was a smaller than expected increase in the jobless claimant count and employment increased 180,000 in the quarter to a fresh record high. Headline average earnings growth slowed to 2.9% from 3.2% previously with underlying earnings at 3.2%. Real earnings increased to the highest level for 11 years which helped underpin market confidence in the outlook with markets considering the data was strong enough to curb any near-term Bank of England interest rate cut. 

The UK government confirmed that the Budget will be presented on March 11th with Chancellor Sunak stating that the government would deliver promises to the UK people. This report helped underpin sentiment amid expectations of sharp spending increases. Sterling moved significantly higher with a move back above 1.3000 against the dollar while the Euro dipped to test support below 1.2050. There was selling interest at higher levels with Sterling drifting to trade just below 1.3000 this morning ahead of the latest UK inflation data while the Euro held just above 1.2020.

EUR

The German ZEW Survey came in much worse than expected, with economic sentiment moving to 8.7 from a previous 26.7. This paired with a strong USD has pushed the pair to its lowest point since early 2017, currently trading at 1.0796. The week will conclude with German and Eurozone PMI early on Friday morning.

USD

The US New York Empire manufacturing index strengthened to 12.9 for February from 4.8 previously and above consensus forecasts of 5.2. There was a strong improvement in new orders and unfilled orders also increased on the month. There were slightly weaker readings for employment while confidence in the outlook also dipped slightly, but the data provided net relief. 

The dollar gained limited net support from the data and advanced to fresh 4-month highs against the Euro which declined to 34-month lows below 1.0800. Narrow ranges prevailed on Wednesday with the Euro unable to recover any ground. 

Data To Watch 

09:30 – GBP – CPI

09:30 – GBP – PPI Unit 

13:30 – USD – Building Permits 

13:30 – USD – Core PPI

13:30 – USD – PPI

19:00 – USD – FOMC Meeting Minutes