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On May 24, local time, Mohsen Rezaei, military advisor to Irans Supreme Leader, stated that Iran will respond "strongly and unprecedentedly" to any actions targeting the Strait of Hormuz or hostile forces entering the Persian Gulf, and will initiate countermeasures by breaking the maritime blockade. Rezaei also stated that if the current situation continues, one of Irans strategic options is to potentially withdraw from the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). He claimed that this move would have "serious consequences" for the other side.On May 24, it was learned from the National Data Administration that my country is accelerating the research and formulation of technical standards for a nationwide integrated computing power network. There are already 12 related guiding technical documents, covering multiple aspects such as computing power monitoring and scheduling, computing-power collaboration, and security protection, to promote the optimal allocation of computing power resources nationwide.On May 24th, European Central Bank (ECB) Governing Council member Kocher stated that the ECB will face an interest rate hike next month unless a sustainable peace agreement is reached between the US and Iran. Eurozone inflation this year may be higher than previously expected, while countries are still grappling with previous price shocks. Meanwhile, the economy has shown considerable resilience. "There are always some extremely low-probability scenarios that could lead to different assessments of the situation, but currently, all indications suggest we will have to decide between maintaining interest rates and raising them," Kocher said. "And it is clear to me that if the situation does not improve, we will have to focus our discussions on taking action." He also stated that it is not appropriate to make any commitments now, and doing so would be meaningless. Uncertainty is high, so too many options should not be ruled out prematurely. Of course, positive developments are hoped for.On May 24, the Russian Ministry of Defense stated that the Russian military used multiple types of missiles, including the Hazel, Iskander, Kinzhal, and Zircon, as well as attack drones, to hit targets including Ukrainian military-industrial complexes, military infrastructure, the headquarters of the Army General Staff, the headquarters of the Main Intelligence Directorate of the Ministry of Defense, and other Ukrainian military command posts. No civilian facilities were planned or targeted.German Chancellor Merz: Russia has once again used the Hazel missile system to attack Ukraine. The German government strongly condemns this reckless escalation.

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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