Weekly Round-Up & The Week Ahead

Weekly round-up and a look at the week ahead for EUR, GBP, and USD.

DAILY ANALYSIS

GBP

Last week saw a flurry of data releases for Sterling alongside external factors in the US and EU driving market volatility as well. The week opened on Monday with the latest round of PMI results. Manufacturing showed a large contraction with a reading of 44.6 vs 47.3 expected however, services nullified the poor reading with a large expansion reading at 53.2 vs 51.2 – composite read at 52 vs 50.6 last time out. Tuesday, saw no high-impact data as all eyes turned to CPI on Wednesday morning and Rachael Reeves’ Spring Budget in the afternoon. CPI MoM figure read at 0.4%, slightly lower than 0.5% expected but, higher than last time out at -0.1%. The YoY figure as well as Core PCI, showed a slight reduction from analysts expectation of 2.9% and 3.6% to 2.8% and 3.5% respectively. The budget did not include any major surprises as reductions in welfare spending, health related benefits and increased allocations to the defence budget dominated the headlines however, the major release was the OBR revision to this year’s economic growth forecast which was halved from 2% to 1%. On Friday, the week closed out with GDP and Retail Sales. The QoQ GDP figure remained in line with both expectation and previous at 0.1% with YoY seeing an uptick from 1.4% to 1.5%. Unlike GDP, Retail Sales came as a surprise to the market with a reading of 1% vs -0.3% expected. Sterling saw a 1% range against both the Dollar and the Euro last week as markets continue to digest the tumultuous start to this year.

This week, data calms down for the British Pound with no high-impact data to report throughout the week, thus making it likely for price direction to be driven by external factors.

USD

A quieter data week for the Dollar with high-impact releases at a premium. Alike Sterling, the Greenback saw the week open with the latest round of S&P PMI’s. Services showed a large expansion at 54.3 whilst manufacturing read at a slight contraction of 49.8. Thursday saw annualized GDP report at 2.4% vs 2.3% in both expectation and last time’s reading whilst the Fed’s preferred measure of inflation in Core PCE released on Friday, showing a slight drop back to 3.5% from 3.6%. The mixed results in the economic indicators allowed trade policy announcements in the form of tariffs to influence the Dollar and cause further volatility. Donald Trump announced a 25% tariff on imported automobiles and light trucks, causing further uncertainty and volatility against currency pairings that were exposed to the tariff’s such as the Euro.

This week, further PMI releases as well as the latest release of labour data will be the highlight for the week. We see ISM Manufacturing PMI released on Tuesday, ADP Employment Change on Wednesday, ISM Services PMI on Thursday as well as Average Hourly Earnings (MoM & YoY) and Nonfarm Payrolls on Friday. The market also prepares for US President Donald Trump’s ‘liberation day’ in which he plans to impose new tariffs on various countries including a 25% levy on goods from Canada and Mexico covered by the USMCA. With this event likely to influence markets dynamics significantly, it could be another volatile week for the US Dollar.

EUR

Alike both its G3 counterparts, PMI for the Eurozone reported at the start of the last week with Manufacturing reporting at 48.7, Services at 50.4 and Composite showing a slight expansion of 50.4 vs 50.2 last time out. Aside from this, it was a data light week for the single currency with the only other high-impact release being ECB President Christine Lagarde’s speech on Thursday in which she reiterated the ‘lose-lose’ scenario for the ongoing trade war with the US following last week’s announcement of vehicle tariffs for imported European cars. With 3 of the 4 largest economies in the EU being some of the largest car manufacturing nations in the world, this move by the US President will cause further tension between the two regions with Lagarde also stating last week that this should be the point when Europe must take control of its future and ‘march to independence’.

This week, Data remains sparce this week with the Core Harmonized Index of Consumer Prices (MoM & YoY) tomorrow as well as regular HICP being the only high-impact release. ECB President Christine Lagarde will also speak again following this release at 12.30pm on Tuesday.

Daily Rates

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