We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Heads Up:🇺🇸 USD Baker Hughes U.S. Rig Count (NOV 15) due at 18:00 GMT (15min), Actual: N/A Expected: N/A Previous: 817 https://www.dailyfx.com/economic-calendar#2019-11-15
  • The US Citi Economic Surprise Index drops below zero as economic data comes in under expectations this week $DXY $SPX https://t.co/zA9zAELlN2
  • House Majority Leader Hoyer says there will be no holiday leave until a government funding bill is approved $DXY
  • Australian #Dollar Price Outlook: #Aussie Plunges to Technical Support - $AUDUSD Levels - https://t.co/rLdZHVkDsq https://t.co/Mdv3GUM2MQ
  • #Gold prices continue to trade within the descending channel from the September 4 and November 1 highs. Get your $XAUUSD market update from @CVecchioFX here:https://t.co/2AOAlwveW7 $GLD https://t.co/oLqswZB5Sd
  • Commodities Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.92% Silver: -0.18% Gold: -0.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/RnOiMfKWGa
  • The $USD edged lower immediately following October US retail sales data which crossed the wires at 0.3% compared to estimates looking for 0.2%. Get your market update from @RichDvorakFX here:https://t.co/lgcorcoa3W https://t.co/06RIJUqFCG
  • Bundesbank's Weidmann: - No economic crisis in Germany - Not against policy that is expansionary, but have to weigh how much is appropriate $EUR
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.33% 🇳🇿NZD: 0.29% 🇪🇺EUR: 0.21% 🇨🇦CAD: 0.13% 🇨🇭CHF: -0.23% 🇯🇵JPY: -0.33% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/G0RZWXUeXK
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: US 500: 0.57% Wall Street: 0.56% Germany 30: 0.02% France 40: -0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/v43U9d30As
Forex: British Pound Tests 1.6400 On Higher Inflation, Euro Rally To Cool Ahead Of EU Summit

Forex: British Pound Tests 1.6400 On Higher Inflation, Euro Rally To Cool Ahead Of EU Summit

2011-03-22 13:30:00
David Song, Currency Strategist
Share:

Talking Points

  • British Pound: Inflation Jumps To 4.4%
  • Euro: Risk For Contagion Intesifies Ahead Of EU
  • U.S. Dollar: Home Price Index, Richmond Fed Index On Tap

The British Pound advance to a fresh yearly high of 1.6400 as the headline reading for U.K. inflation topped market expectations, and the near-term rally in the sterling may gather pace ahead of the Bank of England minutes as market participants speculate the central bank to gradually normalize monetary policy over the coming months. Consumer prices in the U.K. grew at an annualized pace of 4.4% in February to mark the highest reading since October 2008, while the core rate of inflation increased 3.4% from the previous year amid forecasts for a 3.1% expansion. As price pressures intensify, the BoE policy statement due out tomorrow could highlight a growing shift within the MPC, and the central bank may show an increased willingness to lift the benchmark interest rate off the record-low as it aims to balance the risks for the region.

Nevertheless, a separate report showed public sector net borrowing increased GBP 10.3B in February, which exceeded forecasts for a GBP 7.6B shortfall, and the new coalition in the U.K. may weigh alternative measures to reduce the budget deficit as Chancellor of the Exchequer George Osborne is scheduled to deliver his budget statement on Wednesday at 12:30 GMT. As the tough austerity measures dampens the outlook for future growth, the BoE may have little choice but to retain its wait-and-see approach throughout the first-half of the year, and neutral comments from the MPC could bear down on the British Pound as interest rate expectation falter. In turn, the GBP/USD may consolidate going into the middle of the week, and the future prospects for monetary and fiscal policy are likely to paint a clearer outlook for the GBP/USD as policy makers take unprecedented steps to balance the risks for the region.

The Euro extended the advance from earlier this week to reach a fresh monthly high of 1.4247, and the single-currency may continue to retrace the decline from back in November as the European Central Bank continues to talk up speculation for a rate hike in April. ECB board member Juergen Stark said the record-low interest rate risks pushing inflation above the 2 percent target next year while speaking with Japan’s Nikkei news, and saw scope to start normalizing monetary policy as the economic recovery in Europe gathers pace. As interest rate expectations pick up, the near-term rally in the EUR/USD could gather pace in the coming days, but the EU Summit later this week could certainly be a game changer as fears surrounding the sovereign debt crisis continues to bear down on market sentiment.

The greenback weakened against all of its major counterparts on Tuesday, with the USD/JPY falling back to a low of 80.84, and the U.S. dollar may face additional headwinds during the North American trade as the economic docket is expected to reinforce a weakened outlook for the region. House prices in the world’s largest economy is expected to contract another 0.2% in January after falling 0.3% in the previous month, while the Richmond Fed manufacturing index is anticipated to fall back to 24 in March from 25 in the month prior. As growth and inflation remains subdued, we are likely to see the Fed maintain the expansion in monetary policy in the month ahead, and the central bank may look to support the economy going into the second-half of the year as it aims to encourage a sustainable recovery.

Will the EUR/USD Continue to Retrace the Decline From November? Join us in the Forum

Related Articles: Weekly Currency Trading Forecast

To discuss this report contact David Song, Currency Analyst: dsong@dailyfx.com

FX Upcoming

Currency

GMT

EST

Release

Expected

Prior

CAD

12:30

08:30

Leafing Indicators (MoM) FEB

0.7%

0.3%

CAD

12:30

08:30

Retail Sales (MoM) JAN

1.0%

-0.2%

CAD

12:30

08:30

Retail Sales Less Autos (MoM) JAN

0.7%

0.6%

USD

14:00

10:00

House Price Index (MoM) JAN

5.2%

-0.3%

USd

14:00

10:00

Richmond Fed Manufacturing Index MAR

24

25

Currency

GMT

Release

Expected

Actual

Comments

JPY

04:00

Tokyo Condominium Sales (YoY)

--

24.9%

Rebounds from contraction in Jan.

JPY

04:3-

All Industry Activity Index (MoM) JAN

2.8%

2.9%

Climbs after 5 straight contractions

CHF

07:00

Trade Balance (Chf) FEB

--

2.49B

Highest since July ‘10

CHF

07:00

Exports (MoM)FEB

--

4.2%

Continues to grow at healthy pace

CHF

07:00

Imports (MoM) FEB

--

0.3%

2nd consecutive rise

JPY

07:00

Convenience Store Sales (YoY) FEB

--

6.5%

Highest since Sept ‘10

GBP

09:30

CPI (MoM) FEB

0.6%

0.7%

Rising inflation adds pressure to BoE/MPC to act to tamp down inflationary pressures.

GBP

09:30

CPI (YoY) FEB

4.2%

4.4%

GBP

09:30

CPI Core (YoY) FEB

3.1%

3.4%

GBP

09:30

RPI FEB

230.6

231.3

GBP

09:30

RPI (MoM) FEB

0.7%

1.0%

GBP

09:30

RPI (YoY) FEB

5.2%

5.5%

GBP

09:30

RPI Ex-Mort Int. Payment (YoY) FEB

5.2%

5.5%

GBP

09:30

Pubilic Finance (PSNCR) FEB

-4.2B

7.0B

Public sector finances worsen as revenue falls.

GBP

09:30

Public Sector net Borrowing (FEB

7.6B

10.3B

GBP

09:30

PSNB ex-interventions FEB

7.2B

11.8B

GBP

11:00

CBI Trends Total Orders MAR

-6

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.