Currency movement remained minimal yesterday as the pound appeared to be struggling for direction. It seems investors on both sides of the Atlantic remain cautious ahead of comments from Federal Reserve officials on Friday.
One of the Federal Reserve’s most influential rate-setters, Christopher Waller, said the US central bank should “push back” the timing of interest rates after “disappointing” inflation data.
Speaking yesterday, the Bank of England Financial Policy Committee said, “So far UK borrowers have been resilient to the impact of higher interest rates.”
The bank went on to comment on that UK businesses have managed to cope with higher rates but warned small businesses are likely to struggle.
This morning the Office for National Statistics revealed that the British economy contracted 0.3% in the final quarter of 2023, worse than market forecasts of a 0.1% contraction.
In the euro area, the economic sentiment indicator increased in March to 96.3 from 95.5 just a month prior. This was largely supported by an uptick in confidence among manufacturers which soared to a six-month high of -8.8. Consumer confidence also improved.
Later this morning, the German unemployment rate for March is expected to increase slightly from 5.9% to 6.0%. The rate is currently at a three-year high.
At midday, the US GDP growth rate will be revealed for quarter four of 2023. Forecasts expect the economy to have expanded by 3.2%, from a 4.9% expansion in the previous quarter.
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