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  • richard evans

GBP struggles as BoE uncertain over rate path, while ECB, Fed still eye rate rises

Good morning


Running late today so I’ll keep it fairly brief. Did a good deed taking the kids to school but en-route the road has been dug up for gas works and temporary traffic lights are causing a major problem. And how many workers at the hole in the road? Zero. If they are going to create such problems they should surely be at work 24 hours to keep disruption to an absolute minimum.


Enough of my moaning. GBP has had a rough time, trading lower against USD but if anything more against EUR, with GBPUSD seeing a low of 1.1955 this morning, GBPEUR trading down to 1.1245 yesterday afternoon. We are off those lows now, for the time being at least, now 1.2005 and 1.1285 respectively. BoEs Pill speaks this afternoon on the economic outlook for 2023, likely to be closely watched.


The decline in GBP was partly down to BoEs Bailey who made it clear the UK central bank is uncertain as to the next interest rate move, and that economic data before the next meeting on 23rd March would be the decisive factor. On the other hand ECB are making it clear we will see a 50bps rise at their next meeting and US rates will almost certainly move higher as well.


China are flexing their muscles around Taiwan, sending military jets and ships towards the island. I’m sure there are plenty of similar excursions that go unreported and perhaps I should be more relaxed when I see such talk. However I have no doubt China will not relinquish their claims on Taiwan and at some point military action in the region is highly likely. For me its just a matter of ‘when’, rather than ‘if’. Meanwhile US are looking for support from allies over sanctions on China if they do provide weapons to Russia.


On the subject of China, there are renewed reports that Covid may well have been leaked from a Wuhan lab. Nothing is certain here of course but new investigations suggest an accidental leak is quite likely, a possibility that had previously been discounted. While on the subject of Covid, I see ex-Health Minister Hancock (aka Lt Gruber), has had a host of text messages he sent over Covid leaked by Isabel Oakeshott who had access to the texts while she was working on his book.


Ms Oakeshott broke the terms of an NDA she had signed, saying she had to do so in the public interests. I have mixed feeling here. Obviously the texts will produce some items of interest or concern, but I would like to know what consequences Oakeshott will face for breaking the NDA. What is the point of legal agreements if you cannot be held accountable for breaking them.


- 10.00 EU HICP

- 12.30 ECB minutes

- 12.30 ECBs Schnabel speaks

- 13.30 US initial jobless claims

- 15.00 BoEs Pill speaks

- 18.30 RBNZs Orr speaks

- 21.00 Feds Waller speaks

- 22.00 AUS S&P services PMI

- 23.30 Japan Tokto CPI, unemployment

- 01.45 China caixin services PMI


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