Sterling held a firm tone in early Europe on Tuesday with further support from agreement on the Windsor Framework on Monday. The deal to improve the Northern Ireland protocol boosted confidence in the UK outlook, especially as any underlying improvement in EU/UK relations could lead to a wider strengthening of trade ties. Sterling posted weekly highs against the dollar with the UK currency posting solid gains on most crosses. There was month-end Sterling selling into the London fix and risk appetite was also weaker after the Wall Street open which tended to sap UK currency support. UK shop prices increased 8.4% in the year to February, a fresh record high and maintaining pressure on consumer spending. Sterling held against the dollar on Wednesday and amid slightly increased confidence in the global economic outlook.
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French annual inflation increased to 6.2% for February from 6.0% previously while the Spanish rate increased to 6.1% from 5.9% and both figures slightly above market expectations. The data increased speculation that there could be a stronger than expected release for Euro-Zone inflation and the Euro edged higher against the US Dollar as a result.
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Unemployment Rate s.a.(Jan) Prev 5.5% Exp 5.5%
US consumer confidence dipped to 102.9 for February from a revised 106.0 previously and well below consensus forecasts of 108.5. There was an increase in the current conditions component to 152.8 from 151.1, but this was offset by a sharp downgrade in the expectations component to 68.7 from 76.0 in January. The expectations component has been below the 80 level for 11 out of the last 12 months which, according to the Conference Board, often signals a recession within the next year. Overall confidence in the labour market held firm on the month.
The Chicago PMI index dipped to 43.6 for February from 44.3 previously and the sixth successive monthly contraction while there was easing of inflation pressures.
The Richmond Fed manufacturing index retreated further to -16 for February from -11 the previous month and below expectations of -6 with a further sharp decline in new and unfilled orders. There was a marginal easing of the rate increase in prices received.
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