Good morning
Hope you had a terrific weekend. The weather here was milder during the days, it was even warm enough for me to get outside in my shorts to get some much-needed chores done. OK, I’d have got cold if I’d been standing around but there was little chance of that. I’ve not yet cut the grass but it does appear to be growing, not sure how, given the temperatures aren’t quite what I thought they needed to be for grass to grow. Mind you , I did see that in Scotland they experienced some odd weather with temperatures hitting a high of almost 20°c, setting a UK record for January.
Quite a lot to get through today although less to do with currencies and more to do with interesting bits in the news. Lets start with the currency stuff though, where GBP holds gain against EUR after last weeks more dovish than expected ECB meeting, with GBPEUR up at 1.1730, the Aug 2023 high around 1.1775 looks like a clear target and beyond that we’re looking at the pre-Truss/Kwarteng levels from 2022.
GBPUSD is sitting around the 1.2710 area, righ tin the middle of this 1.26-1.28 range that we’ve been stick in since mid-Dec 2023. EURUSD is drifting lower, now 1.0835 after seeing a low Friday around 1.0820, possibly heading towards the levels last seen before the December FOMC meeting in the 1.0730 area.
Whether we do test lower depends a lot on this weeks economic calendar. Its quiet today, tomorrow brings EU GDP, Wednesday sees German inflation and Thursday sees the EU equivalent, together with US ISM PMI’s and then Friday brings US nonfarms payrolls. As if all that wasn’t enough, Wednesday sees FOMC rate announcement, while Thursday sees the same from BoE. With both, no rate changes are expected but as we saw last week, the tone of their statements in relation to timing of rate cuts will be the key. The FOMC will be encouraged by the declines in inflation noted from Fridays core PCE deflator release which came in just below expectations at 2.9%. The risk is that the UKs BoE remains the one who finds any talk of rate cuts most difficult.
Over to the weekend news where of course I need to start with the attack on US forces by Iranian backed forces that killed three US servicemen and injured over thirty personnel. Back in October all the talk was about whether the Hamas attacks on Israel and the resulting Israeli military action would lead to a widening of the conflict in the Middle East. It looked as though we had got away with it, but I fear now this will be a step to far for the US. Iran denies any involvement, saying it is not involved in the decision making of resistance groups, but regardless it is difficult seeing how this cannot lead to an escalation in the conflict.
In other news, I see that the largest cruise liner in the world, Icon of the Sea, set sale over the weekend. Some 365m long with 20 decks, it has a crew of 2,350, can house up to 7,600 passengers and has over 40 restaurants and bars. It has a water park with six slides, and ice rick, an infinity pool and a huge swim up bar. Looks pretty incredible. I’ve not been on a cruise but its on my list of things to do, however every photo I see of a cruise ship shows a relatively small swimming pool with just a handful of sun loungers. The rush in the morning to get those towels out must be horrendous.
In sport, the big news was the Liverpools manager, Jurgen Klopp, announced he’ll be leaving at the end of the season. The race is on to find a new manager, the Liverpool faithful are talking of Steven Gerrard but he’s surely not up to the job. Xabi Alonso is the current frontrunner of quite a long list of contenders. As long as they keep their hands off Spurs’ ‘Big Ange’ I don’t really mind. Apparently he was a massive Liverpool fan growing up. Would be something of a distaster if he left Spurs.
Finally, huge congratulations to the England cricket team who somehow managed to beat India in the test match. England overcame a first innings deficit of 190 runs, helped by Pope scoring 196 runs in the second innings and then bowling India out for just 202, leaving England with a 28 run win to the surprise of both England and India. A good advert for Test cricket, that’s for sure.
Enjoy the way……
- 13.10 ECBs de Guindos speaks
- 23.30 Japan unemployment
- 00.30 AUS retail sales
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