Risk of US default as soon as July, Scotland’s First minister resigns in shake-up of UK political landscape, Israeli inflation unexpectedly gains in January.
February 16, 2023
GBP/USD 1.2048 GBP/EUR 1.1265 EUR/USD 1.0695 USD/CAD 1.3380 EUR/CHF 0.9869 EUR/SEK 11.1390 EUR/NOK 10.8948 EUR/DKK 7.4515 USD/ILS 3.5311 AUD/USD 0.6920 NZD/USD 0.6295 USD/SGD 1.3345 USD/JPY 133.89 USD/CNH 6.8667 USD/INR 82.6950 EUR/ILS 3.7761 GBP/ILS 4.2541 USD/ZAR 18.0472
Sterling dropped yesterday, reaching lows of 1.1990 before recovering to sit in the 1.2060 region as we print. the downturn begun with UK CPI numbers printing more than 5x the BOE target, however strong US retail sales further weighed on the pair into the afternoon. GBPUSD now sits flat on the start of the week. GBPEUR showed steeper declines, sitting down 0.42% this week in the 1.1250 region.
Scotland's first minister, Nicola Sturgeon has stepped down from her role following a wave of political issues over the previous few weeks. With with no clear heir, a number of MPs are in the running for the top job: John Swinney, Kate Forbes and Angus Robertson are to name a few.
British Gas owner Centrica has become the latest energy provider to post huge profits following the soaring energy prices in 2022. Centrica's full year profit's hit 3.2billion, more than 3 times 2021 numbers.EUR
Whilst the Italian economy is one of the most precariously positions in the Euro-Area, there is significant upside risk in 2023 as GDP growth came in higher than expected in the second and third quarter. Looking into next year, the €72 billion government stimulus aimed at protecting households and businesses could boost GDP expectations. Despite this, the consensus is for Italy to slide into recession, whilst the biggest risk is that ECB tightening lifts government bond yields, and Italy gets drawn into a sovereign debt crisis.
EURUSD trades roughly flat over the last 24 hours. European equities have opened higher across the board.USD
A non-partisan congressional budget office has warned that the US government could be at risk of default come July. Since hitting the statutory debt ceiling last month, the Treasury department have been using accounting manoeuvres to make good on the government’s fiscal obligations. Treasury secretary Janet Yellen has warned that if congress did not act, there could be an “economic and financial catastrophe”.
US retail sales rebounded sharply with January seeing a 3% rise, following two consecutive months of declines. This highlights the underlying strength in the US economy. As the robust labour market continues, this confidence in employment is translating into high spending from consumers. This signal of economic strength injected a degree of uncertainty into stocks yesterday, as markets feared that a stream of positive economic data, could raise the Fed’s terminal rate higher.
Overall, the dollar trades 0.4% higher than this time yesterday. Meanwhile, US equities generally finished higher, with the NASDAQ up 0.92%.ASIA/PACIFIC
The Philippines central bank has reinforced its commitment to anchoring the peso, and inflation expectations by delivering another 0.5% hike. It signalled another 0.5% hike coming at its March 23rd. However, current forecast sees tightening peaking after the March meeting.
Bank Indonesia signalled the end of its tightening, alongside its first rate-hold of the cycle. The central bank’s latest play is to wait and see if tighter monetary policy begins to weigh on inflation in the second half of 2023.ILS
Israel’s inflation unexpectedly quickened in January, extending a 15-year high reached in late 2022. Consumer prices climbed an annual 5.4% last month, compared with 5.3% in December, surpassing the expected 5.2%. The most substantial contributors were the cost of electricity, tobacco products as well as housing services.Data & Events
US Jan Housing Starts
US Jobless Claims
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
© 2023 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC.
Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.