Yesterday saw Sterling weakness across the board, with GBP/EUR depreciating to nearly a two week low with GBP/USD following suit and declining below the key psychological level of support yesterday morning. The Sterling weakness can be accredited to pre-budget and pre-election nerves as UK politics dictates market movement.
On the data front; yesterday we had high tier releases from the Eurozone’s powerhouse Germany and the world’s largest economy, the USA. Yesterday morning, German investor confidence rose less than economists’ predicted in March as uncertainty over Greece’s future in the Euro-area countered optimism over an improving economic outlook. German ZEW posted a worse than expected 54.8 against an economists’ consensus of 58.9.
Across the pond, the US released their building permits and housing starts figures. Housing starts slumped in February by the most in four years as the harsh winter weather prevented builders from initiating new projects. On the upside, an increase was seen in the building permits reading.
Today’s docket will be dominated by the Federal Reserve’s statement tonight and the UK annual budget this afternoon.
The calls on whether or not US policy members will vote to keep the word “patient” in the monetary policy statement will dominate the market. If we see this key-word remain in the Central Bank’s language the Dollar should come under heavy scrutiny. This would no doubt surprise the market, however there is still credible risk of policymakers doing just that.
The annual UK budget is released this afternoon. Chancellor George Osborne has promised “no giveaways [and] no gimmicks” in this week’s budget. Economists’ and politicians are expecting further relaxed pension rules and minimum wage to be raised. We also have average earnings from the UK and the Bank of England’s interest rate and QE vote this morning.