Last week, as anticipated, the markets maintained relative stability, with the Pound trading within a narrow range against the US Dollar and Euro throughout the week. The major data released, primarily from the US, failed to spur significant movements, contrary to expectations.
The first significant news came from the US CB Consumer Confidence Index, a key indicator monitored by the Fed for consumer spending and inflation trends. Forecasts suggested a rise to 114.8 from the previous reading of 110.9. However, the actual figures revealed a considerable drop to 106.7, surprising many. Interestingly, despite the disappointing data, the US Dollar only briefly strengthened against the Pound following the release, settling back to similar level as seen previously within a short space of time.
Midweek, attention turned to the US preliminary GDP figures q/q. Expectations were for growth to remain steady at 3.3%, but there was a slight decline to 3.2%. Nevertheless, this performance outshone the UK and Eurozone counterparts previous reading, and the market response was largely subdued, reflecting prior expectations.
Thursday saw the US release additional significant data, including robust unemployment claims and in-line Core PCE Price Index figures. However, the market remained largely unmoved, continuing the week’s trend of minimal volatility.
Looking ahead to the remaining day of the week, the focus shifts to the ISM Manufacturing PMI and Revised UoM Consumer Sentiment figures. Anticipated market movements remain modest, aligning with the week’s subdued tone.
As we glance toward the upcoming week, the spotlight will be on the UK Spring Budget set to be announced on March 6th, with expectations of substantial tax cuts. While a significant market reaction akin to Kwasi Kwarteng’s disastrous budget may not be expected, surprises in the announcement could trigger market swings. Additionally, the ECB’s interest rate decision will be closely monitored, with any indications of future cuts likely to impact the Pound’s strength against the Euro. In the US, attention will be on Non-Farm Employment Friday, with traders eagerly awaiting the outcome. Any unexpected results could lead to a volatile end to the week.
