Market Update – 27/03/17

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GBP

Sterling rallied last week and gained ground on all major currencies on the back of some strong data releases. On Tuesday inflation rose to 2.3% higher than the 2.1% expected and above to 2% government target. GBP gained over a cent on both the single currency and the greenback on the back of the news. Mark Carney stated that the UK will tolerate inflation overshooting for a certain period, but pressure will be on the Bank of England raise interest rates if this continues. On Thursday retail sales figures rose to 3.7%, better than the expected 2.6%. Sterling has continued to rally and is currently at a 5-week high against the Dollar at 1.256. All eyes will be on Theresa May this week as she will trigger article 50 on Wednesday 29th March. This historic day could prove very volatile for Sterling so it is crucial you are positioned correctly if you are looking to buy/sell GBP.

 

USD

Donald Trump lashed out last week at his party’s conservative wing as he failed to pass his first major legislation, his healthcare reform bill, as Dollar weakened over the course of the week. Trump tweeted ‘Democrats are smiling in D.C. that the Freedom Caucus, with the help of Club For Growth and Heritage, have saved Planned Parenthood & care!’. Dollar strengthened to 40 year highs when Trump won the presidency but this was a major blow as it could be a sign of things to come with the House of Commons failing to back Trump.

 

EUR

It is a big week ahead for the single currency. Inflation data for March, released on Friday, March 31 is the big release for the Euro in the next five days. There has been much talk of the European Central Bank (ECB) winding down its stimulus efforts in the face of higher inflation and improving growth outlook for the region, however, inflation will be the main gauge watched by the ECB to determine their timing of such cuts.

Eyes will be on the ECB this week as markets will be looking to see how they react to Article 50 being triggered.

 

In the news this week

Tuesday – USD consumer confidence

Wednesday – Article 50 being triggered

Friday – EUR inflation data for March

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