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  • richard evans

UK inflation beats estimates, will Sunak help households?

Good morning

US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend.

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

This will be until Sunday 27th when we change our clocks in the UK

UK inflation numbers released this morning came in above expectations, CPI hitting 6.2%. GBP remains supported, helped also by news that UK and US have struck a deal to remove tariffs on British steel Chancellor Sunak makes his Spring statement today, eyes on help for households facing higher and higher costs by using the windfall tax receipts, although I think this is likely to be lower than many are hoping for. GBPUSD now 1.3225 having reached almost 1.3300 overnight, EURGBP at 0.8330 (GBPEUR 1.2005), the pair reached 0.8300 (1.2050) overnight. For the record, EURUSD is 1.1020.

Biden meets Western leaders over the next couple of days, talk that further sanctions will be placed on Moscow. Zelensky may join a meeting remotely. Putin making some worrying noises about his nuclear options, his idea that they are only an option if Russia faces an existentialist threat. Question is, how many sanctions can The West place on Russia before Putin regards it as such a threat. For now, bombardments continue with residential building still being targeted, I fear the Ukrainian death toll is far greater than numbers officially released.

Fed officials have been on the hawkish side, Mester sees rates at 2.5% by year end, propelled with some bigger rate rises up front. Even Daly, usually doivish, also confirms rate rises are needed to dampen inflation and that an increase in rates to ‘neutral’ may need to be quicker than first thought. Powell still seems prepared to raise rates 50bps at its next meeting in May. Bullard speaks later, he was the Fed member who voted for a 50bps rise at the last meeting, expect hawkish comments from him.

USDJPY continues to push higher, hitting 121.40 overnight although is now back to the 121.00 level. EURJPY tracked the move, reaching just short of 134.00 before slipping back to 133.25 where we trade now. BoJ minutes due tonight are unlikely to offer JPY any support unless there is any unusual hawkish feeling coming across.

I’ve been looking at a couple of sport stories this week that will likely be controversial. The first is the story of swimmer Lia Thomas, who until 2019 was competing as a man but now competes as a woman and is aiming for the 2024 Olympics. Lia’s swim times are considerably slower than when she swam as a man but there is obvious consternation that she is allowed to compete as a woman. I know there have been similar stories in other sports such as weightlifting.

The other item that caught my attention was of a four year old lad who has been signed by Arsenal. Some video footage confirms he is able to play well above his age range, and competed with up to nine year olds. I can’t say I agree with young kids being taken in by professional clubs, then again in fifteen years when he is scoring for England we’ll all be cheering him.

- 12.00 Feds Powell speaks

- 12.00 ECBs Nagel speaks

- 14.00 US new home sales

- 15.00 EU consumer confidence

- 19.00 Feds Bullard speaks

- 22.00 AUS commonwealth bank PMIs

- 23.50 BoJ minutes

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