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On August 30th, Finnish President Alexander Stubb stated on Saturday that he does not believe Russia will attack NATO, "the worlds most powerful military alliance." However, in an interview with the German newspaper Bild, he said NATO should "prepare for the worst to prevent it from happening." Stubb pointed out that Russia has lost more soldiers than it recruited and judged that Russia may mobilize more troops in the fall, although this move would have "domestic political implications." He said Moscow is in an "increasingly complex situation," but emphasized that Russia will not end the conflict due to an economic downturn. He stated, "Never underestimate how much economic hardship the Russians can withstand."On August 30th, Yonhap News Agency reported that US President Trumps financial disclosures revealed he traded shares of e-commerce giant Coupang Inc. twice in June through a fund manager. Meanwhile, tensions between the US and South Korea continue to escalate over South Koreas regulatory handling of the massive data breach at the US-listed e-commerce giant. In July, the US House Judiciary Committee released a temporary staff report accusing the South Korean government of carrying out a "discriminatory attack" against Coupang and all other US companies, stating that Coupang has been a "consistently targeted entity."On August 30, Iraqi Prime Ministers Security Advisor Qassem Araji stated in a recent interview with Al Jazeera that Iraq maintains "good relations" with both Iran and the United States and seeks to act as a "bridge" for communication among all parties to reach an agreement that safeguards the interests of the entire region. He added that Iran has emphasized the necessity of eliminating extremist groups within Iraq.On August 30th, SK Hynix CEO Guo Luzheng stated that the company remains open to further investment in the US semiconductor industry, while predicting that the global memory chip shortage will continue until the end of 2030. "We are always open to more investment, but no decisions have been made yet," Guo Luzheng said. He stated that SK Hynix is searching globally for potential sites that can meet its R&D and testing needs, noting that electricity, water resources, and government incentives are key considerations. Guo Luzheng said, "We are open to any location that can provide sufficient infrastructure and resources." He also expressed hope that the company will bring "more good news" to the US artificial intelligence industry in the future.Iraqi Prime Ministers Security Advisor Qassem Araj: Iraq seeks to become a "bridge" between Iran and the United States.

EUR/GBP Establishes a Cushion Near 0.8830 Prior to UK Employment and Eurozone GDP Data

Daniel Rogers

Feb 14, 2023 14:48

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The EUR/GBP pair is amassing an intermediate cushion around 0.8830 during the Tokyo session. As investors await the January employment report for the United Kingdom, it is probable that the asset's price may change in the near future. Despite the European Commission's (EC) new GDP estimate and inflation estimates for the Eurozone, the cross' volatility decreased on Monday.

 

In its quarterly report, the EC upped its economic growth forecast for 2023 from 0.3% to 0.9% and expects growth to remain stable at 1.5% for CY2024. While the inflation forecast for 2023 was reduced from 6.1% to 5.6% on an annualized basis. Inflation is anticipated to be 2.5% in 2024, a decrease from the previous forecast of 2.6%.

 

As a result of dropping energy prices and easing supply-chain limitations, inflation projections for the Eurozone have been lowered. However, additional interest rate increases by the European Central Bank are probable, as the inflation rate is significantly above the 2% target. ECB Vice-President Luis de Guindos's statement on Monday that "rate hikes beyond March will depend on data" indicates that ECB President Christine Lagarde will almost probably boost interest rates by 50 basis points (bps).

 

On the economic front, it is projected that the Eurozone's preliminary quarterly and annual Gross Domestic Product (GDP) estimates would remain steady at 0.1% and 1.9%, respectively. This indicates that the Eurozone did not have a recession in CY2022.

 

The bulls of the British pound will be on edge until the United Kingdom's employment numbers are released. The unemployment rate is expected to remain unchanged at 3.7%. Investors will closely monitor the Average Earnings data excluding bonuses, which is projected to increase by 6.5%. This may present new challenges for the Bank of England (BoE), which is struggling to gain the upper hand in its battle against inflation.

 

In terms of long-term recommendations for the British Pound, economists at Rabobank anticipate that the British Pound will remain under pressure in the coming months. "The United Kingdom is the only G7 economy that has not yet recovered to pre-pandemic levels. In addition to slow growth, its fundamentals include high inflation, low productivity, sluggish investment growth, Brexit-related trade frictions, and a current account deficit."

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