National Price Hike Day, sadly not an April Fools Joke
The Office for National Statistics surprised yesterday with the news that the UK economy grew 0.6% in Q4 of 2015, higher than previous estimates of 0.5%. The Current Account deficit for the same period was £32.7bn, equivalent to 7% of GDP. The perceived threat of higher borrowing costs in the event of a Brexit and weaker investment inflows has added to Sterling woes.
The UK March manufacturing PMI figure is due for release today and the general consensus is estimating a slight increase to 51.4 from the 50.8 February figure. The possibility of a weaker than expected PMI cannot be ruled out as factory output has fallen over the three months to March, at the fastest pace since September 2009 due to weak overseas demand and depressed domestic demand. Also starting today are price increases on Council Tax, Water Rates, flight tax, NHS prescriptions and dentists, Stamp Duty, mobile phone contracts and the National Living Wage.
The Dollar remained under pressure in Thursday’s trading, with EURUSD breaking through the 1.1400 level for the first time since October 2015. The Dollar index, which tracks the Greenback against a basket of six rival currencies, lost more than 4% in the first quarter of the year, making it the worst quarter for the currency since the third quarter of 2010.
The Dollar did manage a small gain of 0.13% against the Pound yesterday as Brexit fears continue to undermine any upside in Cable. The US Non-farm payrolls (NFP) and unemployment rate are due for release later today, with the NFP report expected to show an additional 205k jobs added in March. However, it is unclear how big of an impact the report will have on the Dollar as Janet Yellen has cast doubt on the Fed raising rates in April.
GBPEUR saw fresh lows yesterday, trading at the lowest level since December 2014 as we saw a slump towards 1.2500. The common currency was among the top performers in the market yesterday after positive results in Euro Core Consumer Price Index and German inflation figures. The unemployment rate for February and Markit Manufacturing PMI for March is due today and positive results may buoy the Euro further against Sterling and the Dollar.
Data to watch: 7.55am GER Markit Manufacturing PMI (Mar). 8am EUR Markit Manufacturing PMI (Mar). 8.30am UK Markit Manufacturing PMI (Mar). 9am EUR Unemployment rate (Feb). 1.30pm US Non-Farm Payrolls (Mar). Unemployment Rate (Mar).