Market Report: GBP, EUR, and USD Analysis of the Week

Market Report 13/03/23 - 17/03/23

Key Points

• Unemployment Data out in the UK
• ECB Interest Rate Decision
• CPI Data out in the US

GBP

Last week we saw GDP figures come out in the U.K. This result was better than expected and showed progress from the previous result. This was the main market mover last week for the Pound, which lead to the Pound strengthening by just under 1% against both the EUR and USD. Last week we also had the first UK-France immigration deal in 5 years, this saw PM Rishi Sunak and Emmanuel Macron discuss urgent matters such as migration and energy, depending on how this “Partnership” ends then this could see volatility between the Euro and the Pound. We also have the are expecting an announcement on Government Foreign Policy released early this week, depending on what PM Sunak and the Government come out with, we could see a rise or fall in GBP quotes. This week, we also have unemployment data being released, should we see a drop in the result then this can be seen as bullish for the pound, but if we see a rise in the figures then this could have a negative effect on the GBP.

EUR

We had Retail Sales Figures released last week from the Eurozone. We did see a rise in the figures from the previous result, this gave a small boost for the Euro early last week against its major competitors, however, we also had GDP figures released but this saw a drop of 0.1%, so this didn’t help boost the Euro as much as people had hoped. We saw the Euro strengthen by over 1.5% across the week however against the USD after seeing a near 1% decline on Monday following Jerome Powell’s statement regarding U.S interest rates. This week the most significant piece of economic data is coming from the Eurozone as we have the ECB’s Interest rate decision, should we see a hawkish result then this could be bullish for EUR quotes. The last 2 decisions saw the ECB raise the interest rates by 50 bps- and this is expected once again. If we see a change smaller than this, it could have a negative effect on the Euro.

USD

The main market mover last week for the US Dollar was Jerome Powell announcing that the Federal Reserve is prepared to increase the pace of interest rate hike. This lead to USD strengthening against the GBP to levels we hadn’t seen before in 2023. We also had unemployment data at the back end of last week, even with results better than expected at the time, it wasn’t enough to combat the UK’s GDP data. With this US Job figures it does actually mean that future interest rate rises become slightly less likely despite Powell’s statement too. This week we have CPI data being released for the United States, the result will be closely watched as if we do see rises in inflation levels, this will pair with Powell’s speech last week giving the impression that the Fed’s next interest rate decision will be hawkish. We also have Retail Sales Figures being released this week, if we see a drop as expected then this can be seen as bearish for the Dollar, but if we see a rise in these figures then this can be seen as positive for USD quotes. The other major economic piece of data coming out this week for the Dollar is the Michigan Consumer Sentiment Index, this measures consumer confidence in the US Market, a high reading typically is seen as positive for the USD but if we see a low reading then could be seen as negative for USD quotes.