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17 Mar 2015

GBP/USD dragged lower again as markets await data, Budget and Fed statement

United States Dollar: GBP/USD has fallen further over the last 24 hours and it opens this morning at 1.4735. There was no UK economic data of note yesterday and selling in the pair took its cue from bids in EUR/GBP. There’s also a bit of nervousness ahead of the release of BoE monetary policy meeting minutes this morning, at which point we’ll find out whether MPC members were as dovish as they were during their meeting prior to last, at which point members voted unanimously to leave interest rates unchanged. Average earnings and employment data is also due at 9:30 this morning whilst the UK annual Budget release falls due at 12:30, so it’s a busy one to say the least. Whether we’ll see any major moves following the figures and UK events though is arguable as investors and traders await the Fed interest rate statement later tonight. The debate so far has centred around whether the statement will omit the word ‘patience’ in regards to the central bank’s appetite to raise rates. An omission will indicate that a rate hike will most likely come towards the end of summer and it will also be dollar positive.

We expect a range today in the GBP/USD rate of 1.4550 to 1.4900

Euro: Although German ZEW printed weaker than market expectations yesterday it showed that German investor confidence rose for a fifth month in a row. The index for March printed at 54.8 vs. expectations for 58.9 and saw EUR/USD climb up off 1.0570 to a high of 1.0648. US Housing Starts - released later in the day – also supported this move higher in EUR/USD, as they printed weaker than market forecasts in February mostly as a result of the bad US weather in late Jan/early Feb. As the New York session came to an end yesterday, EUR/USD then fell back under 1.0600 and it opens close to this level this morning at 1.0610 as all eyes now turn towards the Fed statement later tonight.

We expect a range today in the GBP/EUR rate of 1.3850 to 1.4000

Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD have fallen over the last day as markets re-position ahead of today’s FOMC statement and Fed Chair Yellen’s accompanying press conference. AUD/USD has dropped gently over the last 24 hours from .7665 to .7600 and NZD/USD has slipped from .7400 to .7290. Both currencies are fairly steady against the pound too and trade at 1.9415 and 2.0235 respectively.

We expect a range today in the GBP/AUD rate of 1.9190 to 1.9550

We expect a range today in the GBP/NZD rate of 2.0110 to 2.0350

Data Releases

AUD: RBA Bulletin

EUR: Trade Balance

GBP: Average Earnings Index 3m/y, Claimant Count Change, MPC Official Bank Rate Votes, Unemployment Rate, Annual Budget Release

NZD: GDP q/q

USD: FOMC Statement, FOMC Press Conference

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