Market Report: GBP, EUR, and USD Analysis for this Week

Market Report 06/03/23 - 10/03/23

Key Points

• GDP figures out in the UK
• Retail sales figures out in the Eurozone
• Nonfarm Payrolls out in the US

GBP

Last week we had CIPS Manufacturing PMI published for the United Kingdom, this did not meet the 50-point mark need to show expansion, this saw a drop against both the EUR and USD. This was especially significant as the Eurozone and United States both showed improvements in their equivalent data sets and that was the main market mover in terms of UK data last week. We did start the week of with a boost for GBP after the U.K Government announced a new trade deals with the EU surrounding the Irish Seas. The perceived new trade terms with the Eurozone are expected to bring positive benefits to the Economy but the finer details are expected to be examined in the coming weeks by experts. We also had Matt Hancock, the former Health Secretary’s WhatsApp messages released in a leak this weekend. This pushed the way the government dealt with the Covid 19 Pandemic into the spotlight, this causes further Government instability as a lot of the current cabinet were at the forefront of the U.K’s pandemic response and thiscould affect GBP quotes. This week we have GDP figures coming out, if we see a rise in the figures then this can be seen as bullish for the Pound but if we see an even further decline then this could be negative for the Pound.

EUR

Last week inflation levels in Germany saw an increase of 0.1%, as well as similar rises across the continent. This was against expectations with most anticipating further decreases in inflation as seen I previous months. This lead to Euro strength against both the Dollar and Pound Sterling, this is because if inflation levels keep rising, this could lead to the ECB raising interest rates even further to combat this. This week we have retail sales figures coming out and a big rise is currently expected against the previous results. Should this be the case then this could positively affect the Euro. If we do see a drop in the result then this can be seen as bearish for the Euro. We also have GDP figures being released, the last 2 results have been negative, if we see another negative result then this will lead the EUR into further uncertainty and could negatively affect EUR quotes, but if we see a rise then this could positively affect the Euro quotes.

USD

At the start of last week, we had Durable goods orders released for the United States, which lead to a huge drop in the results, this lead to a drop in strength against both the GBP and EUR at the time. The other main data release in the US last week was the ISM Services PMI, which takes into account inflation and employment components when giving a result. In the end it beat the 50 Point mark to signal expansion, from this result. The markets are pricing the probability of the next interest rate decision being a 50-bps rate hike at 30%, compared to the last hike of 25 bps. This week we have Nonfarm payrolls being released. Should we see a drop, then this can be seen as negative for the Dollar, but if we see a result that beats the consensus then this could be seen as bearish for the USD. we also have the Michigan Consumer Sentiment released at the end of this week, this shows consumer confidence in economic activity, if we see a drop then this can be seen as bearish for the USD, but if we see a good score, this could be bullish for the Dollar, this is because a good score with translate into more spending and faster economic growth, this can lead to the Fed turning towards bigger interest rate hikes.