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GBP spikes ahead of major economic data

Wednesday, April 10, 2024

Today’s headlines

What’s happening: The British pound moved higher against the US dollar on Tuesday, ahead of some major economic reports this week.

What happened: Optimism around the UK economy sent the GBP/USD forex pair higher, as the country prepared to release its GDP growth data today.

The sterling also recorded gains versus the euro during Tuesday’s session, mainly on profit taking after the European common currency hit its strongest level since March 2.

Why it matters: Investors are waiting for the UK to release its GDP growth after recent data signalled higher food spending in the country last month.

Recent data from the Recruitment and Employment Confederation showed that salaries for permanent staff had increased at the weakest rate in more than three years in March.

Before the release of the GDP report, investors will watch events outside the UK, including US inflation data on Wednesday and the ECB’s (European Central Bank) monetary policy meeting on Thursday.

Interest rate decisions from the Bank of England and the US Federal Reserve will also remain in focus. Traders widely expect the Bank of England to lower rates by 67 basis points (bps) this year.

The UK 10-year government bond yield fell below the 4.1% level, from the five-week high level of 4.165% hit on Monday.

The UK’s retail sales surged 3.2% year-over-year in March, notching the strongest growth since August 2023.

The sterling gained around 0.2% versus the euro to reach 85.65 pence on Tuesday, after the single currency jumped to 85.87 last week, its strongest level since March 26.

The GBP/USD forex pair gained around 0.2% to 1.2679 during Tuesday’s session. London’s FTSE 100 index fell 0.11% to close at 7,934.79, while the FTSE 250 index declined 0.46% to settle at 19,763.35.

What to watch: Investors await the release of economic data on GDP, industrial production and balance of trade from the UK today. The British economy, which grew by 0.2% in January, is expected to expand by 0.1% in February.

Analysts expect the UK’s trade deficit to widen to £3.7 billion in February, from £3.129 billion in January. Industrial production in the UK, which grew by 0.5% year-over-year in January, is projected to rise by 0.6% year-over-year in February.

The markets today

Asian stocks will be in focus today ahead of some major economic reports

Context: Most Asian equity markets moved higher on Tuesday, recovering some losses recorded last week.

Details: Most of the major Asian stock indices gained on Tuesday, despite US stock markets being ending Monday’s trading almost flat, with investors avoiding big moves ahead of more insights on the Federal Reserve’s interest rate decision.

Investors focused on US inflation data to get some cues on interest rates, after a hotter-than-expected NFP (nonfarm payrolls) report last week resulted in traders pricing out expectations of an interest rate cut in June.

Shares of TSMC skyrocketed a record high on Tuesday, after the world’s largest contract chipmaker won a subsidy worth $6.6 billion from the US government.

Japan’s Nikkei 225 extended its recovery, gaining 1.08% to close at 39,773.13 on Tuesday. However, the Japanese index remains below the key resistance level of 40,000.

Hong Kong’s Hang Seng index surged 0.57% to settle at 16,828.07, while China’s SSE Composite Index rose 0.05% to 3,048.54 on Tuesday. India’s S&P BSE SENSEX bucked the trend to decline by 0.08% to close at 74,683.70.

What to watch: Investors await the release of economic reports on producer price inflation and bank lending from Japan today. Producer prices in Japan, which rose by 0.6% year-over-year in February, are expected to accelerate by 0.8% year-over-year in March. Analysts expect the value of loans in Japan to rise by 3.1% year-over-year in March, following a 3% increase in February.

Data on inflation rate from China, due to be released on Thursday, will also remain in focus. China’s consumer prices, which rose by 0.7% year-over-year in February, are expected to accelerate by 0.4% in March. Analysts expect China’s producer prices to fall by 2.8% year-over-year in March, following a 2.7% decline in February.

Other Markets: US trading indices closed mostly higher on Tuesday, with the S&P 500 and Nasdaq 100 up by 0.14% and 0.39%, respectively, and the Dow Jones index down by 0.02%.

The news shaping the markets

Ukraine’s Air Force commander said that the country’s air defence systems had destroyed 20 attack drones launched by Russia overnight. The news sent the RUB/USD pair lower in forex trading this morning.


The Reserve Bank of New Zealand kept its official cash rate unchanged at 5.5% at its recent meeting, lending support to the NZD/USD forex pair.


Argentina’s industrial production fell by 9.9% year-over-year in February, slower than the 12.4% contraction a month ago, which sent the ARS/USD pair slightly higher in forex trading this morning.


US RealClearMarkets/TIPP Economic Optimism Index declined to a four-month low of 43.2 in April, which exerted pressure on the safe-haven US dollar index.


Hong Kong’s foreign exchange reserves fell to $423.6 billion in March, from $425.2 billion a month ago, sending the HKD/USD pair lower in forex trading this morning.

What else to watch today

Italy’s retail sales, US MBA mortgage applications, Brazil’s inflation rate, Canada’s value of building permits and Bank of Canada’s interest rate decision, US Consumer Price Index, wholesale inventories, crude oil inventories, gasoline stocks change, distillate inventories, government budget and FOMC minutes, as well as Russia’s inflation rate.


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© ADSS 2024


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