Euro-area price pressures likely to remain sticky with “more work to do”, quarter of UK’s levelling up funds remain unspent.
March 6, 2023
GBP/USD 1.2029 GBP/EUR 1.1304 EUR/USD 1.0642 USD/CAD 1.3594 EUR/CHF 0.9947 EUR/SEK 11.1681 EUR/NOK 11.0935 EUR/DKK 7.4434 USD/ILS 3.6547 AUD/USD 0.6737 NZD/USD 0.6186 USD/SGD 1.3452 USD/JPY 135.90 USD/CNH 6.9313 USD/INR 81.7288 EUR/ILS 3.8894 GBP/ILS 4.3964 USD/ZAR 18.2189
The UK government's levelling up department states that a quarter of funds planned for projects this year have gone unspent, due to the housing market turmoil and delays in delivery. Almost all the unspent cash relates to housing projects. This comes as inflationary pressures hit the governments flagship pledge to build 40 new hospitals by 2023. People close to the health departments stated that the Treasury now has some difficult decisions around how to fund the programme, as the NHS budget faces a shortfall of £2bn.
Cable gained on Friday reversing most of the Thursday’s losses to close the week up 0.8% as stronger-than-expected US services sector report supported the view US monetary policy will tighten. Cable sits in the 1.2030 region as we print. GBPEUR reversed some of the weeks earlier losses and closed the week up 0.1%. GBPEUR sits in the 1.1300 region as we print. UK car data and PMIS are out this morning.EUR
EURUSD has opened the week higher, gaining 15bps during the morning session, as traders await a relatively quiet start to the week on the data front. The pair rose 1% last week, following a flurry of central bank rhetoric and further support for higher interest rates, as core inflation hit a record high. Speaking over the weekend, Christine Lagarde reiterated that price pressures are likely to remain “sticky in the short term” and therefore there is more “work to do” on rate hikes. Markets have priced in a further 1.5% worth of hikes over the year, which would see the deposit rate at 4%.
European stocks gained for a third consecutive session on the rate outlook and signs of economic resilience, the Stoxx 600 trades 0.2% higher on London open, led by retail and consumer products.USD
The US are introducing a bill this week which would allow the US government to ban firms including services like TikTok. The reason cited for this is data protection, which is allegedly not a serious concern of Chinese firms.
Despite the ongoing headwinds facing the former president, Trump promised to “finish what we started” at a recent event. He promised this regardless of whether he is indicted, and as polls show that republicans would favour an alternative candidate.
The dollar lost ground through Friday, edging below the 104.6 handle. Friday was a good day for US equities with the NASDAQ and S&P500 finishing 2% and 1.6% higher respectively.ASIA/PACIFIC
China said it expects GDP to grow “around 5%” this year. Many economists see this goal as a modest target. Beijing’s aim is to create 12 million urban jobs.
Some commentators have warned that an urgent exit from the Bank of Japan’s ultra-loose monetary policy could be disruptive for markets. Ueda has increased hopes that the central bank may deviate from their current policyILS
USDILS trades slightly higher rebounding through the Asian session. The TA-35 has made a slight resurgence after weeks of decline, as it trades at the 1760 handle as we speak.Data & Events
Euro-Area March Investor Confidence
UK Feb. Construction PMI
Euro-area Jan. Retail Sales
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