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The UAE described the swap proposal as a precautionary and preliminary measure in response to the possibility of a continued war with Iran.Iran currently has no plans to participate in the next round of Iran-US negotiations.On April 20th, Ukrainian President Volodymyr Zelenskyy stated on Sunday that Europe must possess its own ballistic missile defense system, and Ukraine has been negotiating this matter with several countries. Ballistic missile defense is one of the biggest challenges facing Ukraine in the Russia-Ukraine conflict. Zelenskyy stated, "I believe, and my idea is, that we should have a European missile defense system. We are negotiating with several countries and working towards this goal." He added, "We need to establish our own missile defense system within a year." Zelenskyy indicated that this task is extremely difficult but realistic, adding that he has discussed the matter with major European countries, but did not disclose specific countries or provide further details.U.S. Treasury Secretary Bessenter: We welcome Qatar’s continued investment in the United States, particularly in strengthening energy security.On April 20th, the UK Maritime Trade Operations Office (UKMTO) reiterated that the threat level in the Strait of Hormuz remains "critical." The UKMTO noted "navigational interference, blockade enforcement, mine reports, residual kinetic energy risks," as well as "attack risks," citing yesterdays Iranian military attack on vessels in the strait. The UKMTO also stated that the threat level in the Gulf of Oman remains "critical," while the threat levels in the southern and northern Red Sea and the Mediterranean Sea are "moderate."

GBP/USD falls to around 1.2370 as the BoE considers taking swift action ahead of UK inflation and US purchasing managers' indices

Alina Haynes

Apr 17, 2023 13:53

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On Monday morning, the GBP/USD currency pair retested an intraday low of 1.2390 after extending Sunday's decline from a 10-month high. To provoke adverse after breaking a four-week uptrend, the Cable pair explains the most recent concerns emanating from the United Kingdom (UK) and the optimism surrounding the Federal Reserve (Fed).

 

According to the Financial Times (FT), "The Bank of England is considering a major overhaul of its deposit guarantee scheme, including increasing the amount covered for businesses and compelling banks to pre-fund the system to a greater extent to ensure faster access to cash when a lender collapses."  The revelation fuels banking concerns in the United Kingdom and places pressure on the Cable duo.

 

UK Chancellor Jeremy Hunt's concerns about US subsidies may also be exerting downward pressure on the GBP/USD exchange rate as British firms rush to claim benefits before leaving the country. According to the news, "Chancellor Jeremy Hunt warned Sky News that Britain should be wary of any new subsidies, warning that they could undermine the economy and possibly even spark a protectionist trade war."

 

A larger-than-expected decline in US retail sales was unable to offset positive data from US industrial production and the University of Michigan's (UoM) consumer confidence index from the previous day. Despite this, US retail sales decreased by 1.0% in March compared to the predicted -0.4% decline and February's -0.2% decline. As opposed to the 0.2% market consensus and previous reading, Industrial Production increased by 0.4% in the month in question. The preliminary result of the University of Michigan's (UoM) Consumer Confidence Index for April, which increased to 63.5 from 62.0 analysts' expectations and previous readings, was also encouraging. In addition, inflation forecasts for the next year increased from 3.6% in March to 4.6% in April, while inflation forecasts for the next five years decreased by 2.9% during the same month.

 

Notably, Fed officials have recently appeared more hawkish than their BoE counterparts, which has exerted additional pressure on the GBP/USD exchange rate.

 

In this environment, the S&P 500 Futures exhibit modest gains following Wall Street's pessimistic close, while bond yields remain unchanged following weekly increases.

 

Moving forward, the current week is crucial for GBP/USD speculators as it contains a variety of high-quality inflation, employment, and UK PMI data. These data may be used to support the Bank of England's (BoE) officials' waning hawkish inclination and may keep bears in play. However, the US PMIs and Fed discussions should not be disregarded when looking for clear guidelines.

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