UK GfK Consumer Confidence Lowest Since 2009; GBPUSD Little Changed
GfK UK Consumer Confidence Indicator for March continued to disappoint, although higher than estimated figures. Actual level came in at -28, with -30 as consensus and February level at -28. British consumer confidence is at its lowest point post-recession dip, with today’s level comparable to the level set in April 2009. Confidence is also off from the post-recession level high of -13 set in October 2009. Fears of higher inflation, increasing energy prices, further budget cuts and continued unrest in the Middle East and North Africa are cited as major reasons for the stagnant data, though instability in the Euro-zone is also contributing to the weaker data.
Charts generated with Bloomberg Professional L.P.
The British numbers fall in line with the recent consumer confidence reports of other European countries. GfK German Consumer Confidence for April was reported at 5.9, previously at 6.0 for March, citing inflation fears. France’s consumer confidence indicator for March also dropped to 83 from 85 the previous month. A 17-nation Euro survey showed a slip to 107.3 from 107.9 in February. However because these data were gathered in the early part of the month, it is unknown how the natural and environmental disaster in Japan could affect further consumer confidence in the region and in the UK.
Immediately after the report, there were only modest movements in the currency markets. GBPUSD showed a small trend downwards, still above the critical 1.60 level, as lower consumer confidence was probably already factored in from preliminary surveyed data.
Charts generated with FXCM Strategy Trader
Domestically, British consumer confidence is expected to fall further as the coalition government’s austerity measures in order to maintain Britain’s AAA bond rating is met with continued opposition by the public, culminating in mass demonstrations against the cuts this past week. Higher than forecasted CPI reported this month, currently at 4.4% are also adding to further fears of inflation, increasing the importance of the Bank of England’s rate decision on April 7th.
Written by David Liu, DailyFX Research.
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