For anyone who hasn’t glanced at exchange rates since before the Easter weekend, sterling is relatively unchanged against the euro but starts the working week more than half a cent down on the US dollar.
That is not to say that there hasn’t been some movement in GBP/EUR. It strengthened close to a three-week high on Friday, following lower-than-expected inflation data from several EU states, before weakening again.
The main driver of GBP/USD has been the upgrading of the USA’s gross domestic product (GDP) for the final quarter of 2023 from an annualised 3.2% to 3.4%. The UK’s was as first calculated, a fall of 0.2%.
Americans’ personal spending also rose more than expected in February, by 0.8% month-on-month – the fastest rise in over a year. And yesterday the ISM Manufacturing PMI was also above expectations at 50.3, which represents overall optimism in the sector for the first time since 2022.
Further powering the dollar, while the markets were closed on Friday the US Federal Reserve’s chair Jerome Powell said that while he believed inflation was firmly on the way down, the Fed was in no rush to cut interest rates. He was not the only rate-setter making hawkish noises, which led to a stronger dollar but a drop in the Dow Jones Industrial Average.
Later today there will be the first of the big employment data releases of the week – JOLTs job openings – with Non-Farm Payrolls coming up on Friday. There will also be more comment from Powell and other interest rate setters on the FOMC tomorrow.
For the euro, French inflation came in at 2.3% on Friday (down from 3% in February), which Italy’s rose to 1.3%, but still down on expectations. Later today we will hear German inflation and tomorrow morning the eurozone as a whole.
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