Has the ECB already won its battle against inflation?
Hello from London! 🇬🇧
I hope you all had a happy Easter weekend.
This week's takes us to the cities of Marseille, Lyon and Paris in 🇫🇷 France.
Here's a quick recap of the past week movement on the main pairs, weekly economic news and what to expect for the week ahead as we start the new month and a new quarter.
🇬🇧 GBP
The last week in Britain was relatively calm when it came to economic news as we ended the 1st quarter of 2024.
Business investments went up by +1.4% in Q4 2023, up from a decrease of -2.8% in Q3. Current accounts showed a deficit increase of £-21.2Bn, in line with expectations. The Office for National Statistics confirmed the GDP figures and the -0.2% YoY GDP loss for Q4 2023.
Yesterday the HPI showed a surprise pause in the UK housing market with a drop of -0.2% MoM for March, despite a construction PMI back in expansion this morning at 50.3.
We will be looking forward to the release of the services PMI figures for this end of week.
🇪🇺 EUR
Last week was also relatively quiet in Europe but inflation data this week will be key in understanding what the ECB will be planning next.
The GfK consumer climate index showed an ever present negative outlook on market conditions from consumers. Unemployment remains unchanged however for March in Germany while it decreased in Spain, with good numbers coming out for March. Spain saw relative GDP growth in 2023 with a 0.6% YoY increase, with however a CPI still above the 2% target, at 3.2%.
This week all eyes will be on the Eurozone CPI data this morning, with the German CPI data coming out at 2.2% yesterday, the outlook is positive and could show that the battle against inflation in the Eurozone may already have been won by the European Central Bank. Markets are already pricing a 25bp cut by June.
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🇺🇸 USD
In the United States, last week saw new home sales decrease by -0.3% whist durable goods order bounced back from a sharp decrease by -6.9% the month prior. GDP growth was confirmed at 3.4% for 2023 and the ISM construction PMIs came back to expansion at 50.3.
This week we will be looking at factory orders, services PMIs and the trade balance figures.
The geopolitical situation in Gaza is also a big point of contention as the situation in the Red Sea remains tense and the US attitude towards Israël seems to be changing as the UN has finally being able to avoid a US veto against a ceasefire. The recent bombing of a hospital killing international aid workers, including American citizens pushes in that direction too.
The earthquake in Taiwan this morning also revived tensions between China and the US with Beijing reaffirming to Washington that Taiwan is a hard line not to cross.
🇨🇳 CNY
China is also relatively quiet in terms of news with the Ching Ming festival happening this week. It's a public holiday lasting a week where ancestors are honoured, and tombs are cleaned and decorated with flowers.
Last week saw the release of the Caixin PMIs, with both manufacturing and services coming out in expansion at 51.1 and 54.9 respectively.
Open rates week 02/04/2024:
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