In the past 24hrs, the Euro has gained against Sterling after Business Confidence in Germany unexpectedly rose to it’s highest level in almost 15 years in March, giving investors encouragement that the ECB will move interest rates again over the coming months. Coupled with the ifo Index, Consumer Confidence in Germany rose to it’s highest level in nearly 4 years this morning, which gives further indication that household spending in Europe’s largest economy will continue to support economic growth.
With regards the Dollar, U.S. Consumer Confidence, which was expected to show only a mild rise in the month of March, also jumped to it’s highest level in 4 years, due primarily to an increase in household income. However, the focus was on the FOMC announcement at 20:15 last night where the Federal Reserve announced a quarter-point rise in interest rates to take them to 4.75%, the highest level since March 2001. The Fed chairman, Ben Bernanke indicated that he will extend borrowing costs this year, prompting investors to debate that further rate hikes are ahead. As a result, the Dollar strengthened significantly against Sterling driving the rate back under 1.7500, which was the high of yesterday.
There is some significant data released this morning in the UK with fourth quarter GDP data expected to be unchanged and Consumer Credit is forecasted to show a slight decline in February.
written by Adam Solomon
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