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Market Update

• Posted by currencies in Bank of England, Currency, Dollar, Economy, EUR, Fed, GBP, Inflation, Rate Cuts, Sterling, UK, Uncategorised
• February 16, 2023
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The USD dipped slightly this morning, giving up some of its gains from yesterday but is still keeping GBP struggling to break the 1.21 area and the EUR just about hanging on to 1.07. U.S Retail Sales rebounded sharply in January after two straight months of declining figures, rising 3% on the month when compared to December’s 1.1% fall. This has added to the stronger than expected inflation release for The U.S, coming in at 6.4% against expected figures of 6.2%. This has now largely cemented the case for further rate hikes by The Federal Reserve in the coming months.

On top of this, the resilience of The U.S economy is coming through and Goldman Sachs have now this week cut its estimate of the chance of a U.S recession in the next 12 months to 25%, down from 35%. The main contributor to The USD slipping this morning, is due to an increase in confidence in The USD and therefore traders buying into more riskier currencies.

The EUR has stayed buoyed above 1.07 due to President Christine Lagarde reiterating yesterday that The Central Bank still intends to raise their interest rates by 50 basis points next month, following the exact same hike a few weeks back.

Later today, we have the weekly jobless data in The U.S. Expectations suggest a slight increase within unemployment, however these figures will be very volatile over the coming months as more and more companies make significant lay-offs.