GBP
Sterling had another poor week last week, closing in the red for the third week in a row, as the pound’s precipitous fall towards the 1.30 mark continued, with cable printing new lows since November 2020 in the process.
The move came amid another wave of broad risk aversion across financial markets, as investors continue to monitor the situation in Ukraine, once more denting the attraction of higher-beta currencies such as the GBP.
This week, domestically, the BoE’s latest policy decision highlights the calendar, with policymakers set to vote in favour of another 25bps rate increase, the third rate hike in as many meetings
Besides monetary policy, this week’s calendar is rather on the light side, leaving geopolitical developments the main highlight once more.
USD
As mentioned above, investors showed a significant desire for safety and shelter last week, amid escalating clashes in Ukraine, sparking a fifth straight week of dollar gains, as the DXY inches ever closer to the psychologically important 100 handle; USD gains were most notable against higher-yielding currencies.
This week, all eyes will be on Wednesday’s FOMC meeting, with the Fed set to announce a 25bps rate hike, while indicating that as many as five further such hikes could come over the remainder of this year.
EUR
In a similar manner to the pound, the common currency found itself out of favour last week, testing $1.09 once more, as investors flooded into the USD and other safe-havens.
The euro’s failure to rally was interesting because it came at the same time as one of the most hawkish ECB decisions in recent memory, with net asset purchases to end in Q3, and a rate hike likely before the end of this year.
Looking ahead, a quiet week awaits, with no major scheduled economic events due in the eurozone.
| Date | Region | Release | Previous | Consensus |
| Monday 14th March | EU | Eurogroup Meetings | ||
| Tuesday 15th March | AUD | Monetary Policy Meeting Minutes | ||
| Tuesday 15th March | EU | ZEW Economic Sentiment | 48.6 | 10.3 |
| Tuesday 15th March | US | PPI m/m | 1.00% | 1.00% |
| Wednesday 16th March | CAD | CPI m/m | 0.90% | 0.90% |
| Wednesday 16th March | US | Retail Sales m/m | 3.80% | 0.40% |
| Wednesday 16th March | US | Federal Reserve Interest Rate Decision | <0.25% | <0.5% |
| Wednesday 16th March | NZD | GDP q/q | -3.70% | 3.20% |
| Thursday 17th March | AUD | Unemployment Rate | 4.20% | 4.10% |
| Thursday 17th March | UK | Bank of England Interest Rate Decision | 0.50% | 0.75% |
| Friday 18th March | CAD | Retail Sales m/m | -1.80% | 2.40% |
WORLD NEWS
A selloff in Chinese tech stocks continued today, as China’s close relationship with Russia raised concerns for businesses. We experienced a near 9% drop, as US futures rose with China placing over 15 million residents in the southern city of Shenzhen into lockdown, which is a huge technology hub for the country.
A likelihood of another recession in the UK is rising, with inflation expecting to exceed 8% by the autumn as a knock-on effect of the Ukrainian conflict. A London based group called Resolution Foundation published a report today which showed poorer households are expecting to pay more than 10% for food and energy with an income drop of 4%. The group called on the UK chancellor, Rishi Sunak to raise state benefits 8% instead of 3.1% from April to help ease the pain of increased prices on poorer households.
| Share Index | Prev. Close | Open |
| FTSE100 | 7155.64 | 7155.64 |
| DAX | 13628.11 | 13827.22 |
| CAC40 | 6260.25 | 6298.96 |