Pakistan’s military chief is in Tehran today. That might sound a long way from the pound, the euro or your exchange rate – but his mission is as close to good news as markets have seen in weeks: a fresh round of talks aimed at extending the Iran ceasefire before it expires next Tuesday.
That six-day countdown is driving everything at the moment. The pound is close to its strongest level against the dollar since mid-February. Oil has pulled back from its recent peaks. The mood is cautious, but noticeably better than it was a week ago – and if you have been waiting for a more favourable moment to buy euros for a property purchase, send money abroad or convert savings, it is worth paying attention to how this week unfolds.
This morning brought fresh data on the UK economy. The Office for National Statistics published its monthly gross domestic product (GDP) figure for February – the last snapshot before the Iran conflict muddied the picture. January was flat, so markets are hoping February shows a bit more life underneath. It matters because the Bank of England meets on 30 April and whatever this number says feeds directly into what policymakers decide about interest rates.
The International Monetary Fund had something eyebrow-raising to add yesterday. Having already cut its UK growth forecast earlier this week, it turned its attention to government borrowing around the world – warning that combined global public debt will hit 100% of global economic output by 2029. The United States, it said, is on course for one of the heaviest debt loads of any major economy. That is a meaningful part of why the dollar has been falling. When the IMF publishes a report pointing a finger at American finances, traders take note.
Two things to watch in Europe this afternoon. Eurostat confirms the final inflation figure for the eurozone in March, and the European Central Bank releases the internal notes from its March meeting. Those notes will show, for the first time, exactly how Frankfurt’s rate-setters debated the oil shock behind closed doors – and whether any of them pushed for a rate rise. The answer matters if you are planning a property purchase on the continent or sending regular payments to Europe.
Across the Atlantic, a run of US economic data arrives this afternoon, including weekly unemployment figures and a manufacturing survey from Philadelphia. The head of the New York Federal Reserve also speaks this morning before America’s central bankers go into their pre-meeting silence. The Fed almost certainly will not cut rates at the end of the month. The more interesting question is whether any of them are seriously discussing going the other way.
Mark Wednesday 22 April in your diary. That is when the UK publishes its first inflation figures for March – the first real evidence of how quickly the energy shock is feeding through to everyday prices. It is also the day the ceasefire is due to expire. Both will move the pound.
