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April 4th - According to CNN, as the Middle East conflict enters its second month, the oil shortage crisis risks escalating into a worse situation – shortages of almost everything. The conflict has severely restricted oil and gas transport through the Strait of Hormuz, reducing global supply by about one-fifth. This disruption has not only driven up fuel prices but also squeezed the supply of petrochemical products needed to manufacture everyday items such as shoes, clothing, and plastic bags. As prices for materials like plastics, rubber, and polyester rise, this pressure is spreading to every corner of the consumer market. Asia is currently the most affected, home to more than half of the worlds manufacturing and heavily reliant on imported oil and other commodities. Dan Martin, co-head of business intelligence at Deloitte Touche Tohmatsu, stated that this will very, very quickly impact all goods, such as beer, noodles, potato chips, toys, and cosmetics, because plastic bottle caps, shipping pallets, snack bags, and containers are becoming increasingly difficult to procure. Martin added that adhesives used in footwear and furniture, industrial lubricants for machinery, and solvents used in paints and cleaning processes also rely heavily on petroleum-derived products.On April 4th, the Israel Defense Forces (IDF) issued a statement saying that on April 3rd, the IDF conducted airstrikes on multiple targets in Tehran, the Iranian capital. The statement said the strikes targeted several key Iranian infrastructure sites, including an Iranian Islamic Revolutionary Guard Corps (IRGC) air defense facility storing missiles used to engage aerial targets. The statement also said the IDF attacked a military base responsible for protecting Iranian weapons research and development facilities. Additionally, it struck a ballistic missile storage site and several weapons production and research facilities. Iran has not yet responded to the attacks.The governor of Rostov Oblast, Russia, said that businesses in the southern Russian city of Tolyat were attacked by Ukrainian drones.The governor of Russias Rostov region said that Ukrainian airstrikes on Russian territory have killed at least one person and injured four others.NASA: Artemis program astronauts have completed half of their lunar mission.

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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