January 16, 2023

Daily Report 16/01/2023

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There was only a limited reaction to the latest round of UK data with relief over the latest GDP data offset by concerns that there will be sharp deterioration in the first quarter of this year. There was some relief surrounding the latest trade data and lower energy prices will also provide important relief. CFTC data recorded a further increase in short Sterling positions to 29,500 in the latest week from just over 20,000 the previous week and the largest short position since early December, maintaining the potential for short covering if Sterling can make headway. Comments from Bank of England Governor Bailey will be watched closely later on Monday. Equity markets held firm on Monday.

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13.00 Andrew Bailey Speech

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Euro-Zone industrial production increased 1.0% for November after a 1.9% decline the previous month with a 2.0% annual increase. German economy Minister Babeck stated that the winter slowdown in the economy will be milder than anticipated previously, especially with a decline in gas prices, which maintained a constructive Euro tone. The Euro was, however, unable to make further headway. There was pressure for a correction after sharp dollar losses and the Euro drifted lower.

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The University of Michigan consumer confidence index strengthened to 64.6 for January from 59.7 the previous month and above consensus forecasts of 60.0. There was a significant improvement in the current conditions component and a smaller improvement in the expectations component. The 1-year inflation expectations index retreated sharply to 4.0% from 4.4% the previous month while the 5-year index edged higher to 3.0% from 2.9%. US markets will be closed on Monday for the Martin Luther King holiday which will dampen activity, although there will still be the threat of volatility.

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