Sterling waits on latest BOE rate decision
Friday’s UK trade data releases generated only a measured reaction in the Pound largely as the expectations of a strong economic recovery were partly offset by concerns of trade friction with the EU persisting. Sterling faded as the day progressed, dipping below 1.3900 to the Dollar and the Euro strengthened to highs around 1.1630. Global factors were the key driver and slightly weaker risk appetite limited support for the Pound.
Sterling climbed back above 1.3900 against the Dollar while the Euro settled around 1.1640. Futures market data recorded a small decline in bets on Sterling rising, slightly down on 2.5year highs which suggests hedge fund buying may have lost momentum.
More countries have suspended use of the AstraZeneca vaccine but the company has denied evidence of the jab causing blood clots. The Pound edged just above 1.3900 to the Dollar this morning and up to 1.1661 against the Euro.
US producer prices increased 0.5% for March, in line with consensus forecasts, with a year-on-year increase of 2.8% from 1.7% previously while core prices increased 2.5% over the year. The US currency was also supported by a fresh advance against commodity currencies in choppy trading conditions.
The University of Michigan consumer confidence index strengthened to 83.0 for March from 76.8 previously and above consensus forecasts of 78.5. There were significant increases in the current conditions and market expectations components for the month. There will be expectations of a further boost to confidence in the short term as the economic stimulus package takes effect.
With Friday’s trading volumes lowering ahead of the weekend, the pick up at the start of the European session has seen the Euro drop off to just above the 1.1920 mark against the Dollar.
Eurozone confidence was also hampered by reports that coronavirus restrictions would be tightened again in Italy in response to an on-going increase in new cases. The Euro dipped to lows on Friday to 1.1910 before regaining and climbing to 1.1950 late in the day as the Dollar lost ground. German Chancellor Angela Merkel also suffered defeat in two regional elections with the defeat being linked to the government’s handling of the COVID-19 pandemic and its economic fallout.