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Fitch: Higher oil prices are somewhat beneficial in the short term for the ratings of the UAE and Saudi Arabia.Fitch: The UAE’s withdrawal from OPEC has no direct impact on the current situation, as the UAE is unable to export oil.JPMorgan Chase raised its price target for Phillips 66 (PSX.N) from $188 to $202.Ukraines Foreign Minister: Ukraine welcomes the fact that a ship carrying grain from occupied Ukrainian territories did not unload its cargo in Israel.Eurostat data released Thursday showed that eurozone inflation surged further in April, driven by soaring energy costs, adding to the justification for a European Central Bank (ECB) interest rate hike, although modest underlying price growth data reduced the urgency of any action. The eurozones preliminary April CPI jumped to 3.0% year-on-year from 2.6% in the previous month, further exceeding the ECBs 2% target, with energy costs accounting for the vast majority of the increase. Meanwhile, core inflation, excluding volatile food and energy prices, slowed. Services inflation—a persistently high component of the price basket in recent years—slowed to 3.0% from 3.2%, while non-energy industrial inflation, a major drag on prices, rose to 0.8%. These figures are mixed for the ECB, which will likely keep interest rates unchanged at its meeting tonight, although it will signal an increasing likelihood of policy tightening. While high overall inflation data provides a reason for a rate hike, underlying data suggests that the initial energy shock has not yet produced a significant second-round effect.

The EUR/GBP exchange rate recovers above 0.8000 in advance of Eurozone inflation and UK gross domestic product

Alina Haynes

Mar 30, 2023 16:05

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The EUR/GBP pair extended its recovery above 0.88 during the Asian trading session. Anticipating that the European Central Bank (ECB) will continue to raise interest rates to combat persistent inflation, the cross has depreciated progressively. Friday will see the publication of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and Gross Domestic Product (GDP) (Q4) figures. Prior to the publication of these figures, it is anticipated that the asset will exhibit explosive activity.

 

It is anticipated that the preliminary Eurozone HICP will decelerate significantly from 8.5% to 7.3%. While it is anticipated that the core HICP will rise to 5.7% from 5.6% in the previous release. Weak energy prices are anticipated to have a significant impact on Eurozone inflation. In light of Christine Lagarde's prediction that inflation will remain elevated for an extended period of time, the European Central Bank (ECB) is expected to continue tightening monetary policy.

 

In the interim, banking tensions are subsiding as the absence of information regarding additional collateral damage has a positive impact on the market. Chief Economist Philip Lane stated on Wednesday that ECB interest rates must rise if banking tension has no or a "relatively limited" impact.

 

Investors avidly anticipate the United Kingdom's Gross Domestic Product (GDP) data. According to the consensus, the United Kingdom's growth in the fourth quarter of CY2022 remained unchanged. It is anticipated that the annual GDP will remain unchanged at 0.4%. It is expected that the British economy will undergo a severe recession as a result of high inflation and sluggish growth.

 

The Bank of England (BoE) policymakers appear confident that inflation will moderate in the near future and that the unexpected rise in February's inflation was a one-time anomaly; however, the absence of evidence raises doubts. If inflation persists, BoE Governor Andrew Bailey stated that additional rate increases would be announced. In contrast, Bank of America (BoA) analysts anticipate that the Bank of England (BoE) will not increase rates and will maintain current levels until 2024.


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