Over the last week we saw the market being to face sell-offs due to concerns about bond prices and yields- what was positive to see was the Sterling reaction. GBPUSD fell under 1.40 (After a rise to 1.42) and GBPEUR managed to hold 1.15 which gives us a good base for the next week- and a good insight into the resilience of Sterling exchange rates currently.
Over the next week we have a few events that I feel could be supportive to Sterling- the first being the UK Budget which will be delivered by Chancellor Sunak on 3rd March- we have had some soundbites about 5% deposit mortgages, hospitality sector VAT, extension of furlough, a potential increase of corporation tax, capital gains tax and pension tax. Of course at this point we are speculating- so we will have to see how Wednesday goes, but I feel this budget’s aim will be to continue supporting the UK economy and should be taking positively by the markets. Generally, the budget does not really affect exchange rates but this one has the potential to change that narrative.
Fed chair Jerome Powell will be speaking on Thursday, and this is one all participants will be watching- though he spoke many times over the last week, we will be waiting to hear any comments about bond prices and yields which could be supportive to the markets- otherwise, it seems many are still anticipating sell-offs in equities and also in risk currencies.
Aside from speeches, we do also have some important economic data releases this week- which I have listed below if you wish to keep an eye on them- I am still unsure of how much effect they will have due to much of the world still being in some form of restrictions- but worth noting the numbers for future reference into recovery.
Monday
- UK- Markit/CIPS Manufacturing PMI (Expected higher)
- UK Mortgage approvals
- Italian Government budget
- Germany inflation
Tuesday
- Australia interest rate decision (No change expected)
- Germany retail sales (Expected lower)
- Euro inflation rate (Expected lower)
Wednesday
- UK PMI for manufacturing and services (To remain below 50)
- Germany PMI for manufacturing and services
- USA- ADP Employment change
Thursday
- UK construction PMI
- Euro retail sales
- USA Jobless claims
Friday
- Canada trade balance
- USA- Non farm payrolls