It’s a Busy Day Ahead for the Pound, with Economic Data and the Budget in Focus

Daily Update – 11 March 2020

Yesterday's Focus

• EUR Gross Domestic Product s.a. (QoQ) (Q4);  French Non-Farm Payrolls

Yesterday's Explained

The dollar had jumped back on Tuesday as investors hoped global monetary policymakers will launch further stimulus plans aimed at bolstering economies hit by trade and travel disruptions. U.S. President Donald Trump said on Tuesday he will ask Congress for a payroll tax cut and other “very major” stimulus moves, although the details remain unclear.

“It is too early to say the market sentiment has turned positive. Yesterday’s rebound in the dollar and in risk assets is a type of a rebound you often see in a downtrend,” says Currency Analyst.

The pound slumped against the dollar on the eve of the U.K. budget revelation despite expectations the country is set to deliver a big stimulus package and measures to help combat the Covid‐19 outbreak. GBP/USD fell 1.59% to $1.29.

On the EUR-side of the story, the risks of a recession in the Eurozone, particularly in Germany, remain high in the face of the infectious disease. Therefore, the European Central Bank (ECB) will likely resort to additional stimulus measures on Thursday to cushion the economic blow, which could very well hurt the shared currency, with the EUR/USD correction likely to resume.

 

Today’s Market

• GBP Gross Domestic Product (MoM) (Jan); Manufacturing Production (MoM) (Jan); Industrial Production (MoM) (Jan); Trade Balance (Jan); Autumn Budget 

• USD Core CPI (YoY) (Feb)

Today’s Focus

For the EUR, it’s a quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to influence the EUR. A lack of stats will leave the markets to consider tomorrow’s ECB monetary policy decision and member state fiscal stimulus plans. Any risk aversion over the course of the day would be considered EUR positive.

For the Pound, it’s a particularly busy day ahead on the economic calendar. Key stats include January GDP and industrial and manufacturing production figures. January’s trade data that are also due out will likely have a muted impact, however. Outside of the numbers, the government will also announce its budget, with the markets expecting a loosening of the purse strings. Today’s stats and the budget are key for the Pound as the BoE remains poised to deliver support.

Across the Pond, it’s a relatively busy day ahead on the economic calendar, with February inflation figures due out later today. With the markets expecting a 2nd rate cut by the FED later this month, expect the Dollar to be more sensitive to softer numbers. Forecasts are for the core annual rate of inflation to hold steady at 2.3%.Outside of the numbers, the markets will be looking for the U.S administration to make progress on delivering relief to consumers.