March 30, 2023

Daily Report 30/03/2023

Share this:


great british pound icon

In UK mortgage approvals increased to just above 43,500 for February from just below 40,000 the previous month and above consensus forecasts of 40,500. There was, however, a sharp dip in mortgage lending for the month while there was a further significant increase in consumer credit for the month. There was little overall change in interest rate expectations with markets pricing in around a 60% chance of a further interest rate increase at the May policy meeting. Sterling continued to gain net support from a firmer tone surrounding risk appetite as global equities made headway. Bank of England Monetary Policy Committee Mann stated that it will be difficult for central banks to set monetary policy during the second half of the year as they are likely to face a sharp decline in headline inflation, but sticky core inflation. This will increase pressure for banks to cut rates, but they will want to see that inflation is squashed before doing so.

No Key Data 

Euro logo

In comments on Wednesday, ECB chief economist Lane stated that interest rates must increase further if banking tensions have little or no impact on the economy. He added that tensions appear to be settling down and there are no reasons to expect major problems. Given that market tensions remained lower during Wednesday, there were expectations that the ECB would maintain a hawkish stance and raise interest rates further. These expectations were also significant in underpinning the Euro during the day. The latest German inflation data on Thursday and Euro-Zone data on Friday will have a significant impact on interest rate expectations. Consensus forecasts are for a sharp decline in the headline rate due to favourable base effects. ECB council member Schnabel stated that the data from labour costs possibly indicate second-round effect.

Key Data

13.00 German Harmonised Index of Consumer Prices (YoY) (Mar) Exp. 7.5% Prev. 9.3%

dollars icon

US pending home sales increased 0.8% for February after an 8.1% jump the previous month and compared with expectations of a 2.0% decline for the month. Federal Reserve Governor Barr stated that the central bank will make interest rate decisions on a meeting-by-meeting judgement. The comments added little to the underlying debate with markets waiting for high-frequency data to assess whether there has been any impact on economic conditions from tensions within the banking sector. There were no major comments on monetary policy from key Fed officials.

Key Data

13.30 Gross Domestic Product Annualised (Q4) Exp. 2.7% Prev. 2.7%