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UK inflation set to moderate again
20/03/2012
Morning Comment
Current mid-market inter-bank spot rates (as at 08:05 GMT)
Major sterling
|
£-usd
|
1.5845
|
£-eur
|
1.1985
|
€-gbp
|
0.8342
|
|
£-jpy
|
132.40
|
£-chf
|
1.4460
|
|
|
Major US$
|
eur-$
|
1.3227
|
$-eur
|
0.7564
|
Sterling emigrate
|
£-aud
|
1.5055
|
£-nzd
|
1.9315
|
|
£-cad
|
1.5685
|
£-zar
|
12.02
|
Other sterling
|
£-dkk
|
8.9120
|
£-sek
|
10.6750
|
£-pln
|
4.9395
|
|
£-trl
|
2.8730
|
£-hrk
|
9.0360
|
£-sgd
|
2.0005
|
|
£-aed
|
5.8190
|
£-thb
|
48.81
|
£-bgl
|
2.3440
|
|
£-brl
|
2.8865
|
|
|||
Euro crosses
|
€-brl
|
2.4085
|
€-aed
|
4.8550
|
€-trl
|
2.3970
|
|
€-hrk
|
7.5395
|
|
|||
|
|
Current Price
|
2012 open
|
YTD change
|
Month Open
|
MTD change
|
2011 change
|
|
£-usd
|
1.5845
|
1.5501
|
+2.2%
|
1.5761
|
+0.5%
|
-0.4%
|
|
£-eur
|
1.1985
|
1.1978
|
+0.1%
|
1.2046
|
-0.5%
|
+2.7%
|
|
£-chf
|
1.4460
|
1.4552
|
-0.6%
|
1.4503
|
-0.3%
|
+0.0%
|
|
£-jpy
|
132.40
|
119.31
|
+11.0%
|
120.21
|
+10.1%
|
-5.7%
|
|
£-aud
|
1.5055
|
1.5169
|
-0.8%
|
1.4839
|
+1.5%
|
-0.6%
|
|
£-cad
|
1.5680
|
1.5830
|
-0.9%
|
1.5799
|
-0.7%
|
+2.2%
|
|
eur-$
|
1.3227
|
1.2941
|
+2.2%
|
1.3084
|
+1.1%
|
-3.0%
|
Data / Events due today
|
Time
(bst)
|
Country
|
Data/Event
|
Period
|
Consensus
|
|
09:30
|
UK
|
CPI
|
Feb m/m
|
0.4%
|
|
09:30
|
UK
|
CPI
|
Feb y/y
|
3.3%
|
|
09:30
|
UK
|
Core CPI
|
Feb y/y
|
2.3%
|
|
09:30
|
UK
|
RPI
|
Feb m/m
|
0.6%
|
|
09:30
|
UK
|
RPI
|
Feb y/y
|
3.5%
|
|
09:30
|
UK
|
RPIX
|
Feb y/y
|
3.6%
|
|
11:00
|
UK
|
CBI Trends Total Orders
|
Mar
|
-5
|
|
12:30
|
US
|
Housing Starts
|
Feb m/m
|
0.1%
|
|
12:30
|
US
|
Building Permits
|
Feb m/m
|
0.5%
|
Fundamental
Despite a continuation of the advance in equity markets together with rising bond yields, the dollar lost ground for a third consecutive day as risk sentiment holds firm and oil prices continue to soar. Although a concern in the near term, policy makers remain confident inflation will moderate in the medium to longer term.
A slightly less downbeat assessment from the Reserve Bank of Australia in its latest minutes failed to prop up the currency with the Australian dollar weakening overnight on the back of a warning over a slowdown in mining.
After a quiet start yesterday, this is a big week for UK data. Today sees the release of February inflation figures. Inflation is expected to moderate once more although there is room for an upside surprise in the headline figure given recent rises in energy prices. Tomorrow’s Bank of England minutes will give the latest insight into the mindset of the MPC after both interest rates and the asset purchase facility were left unchanged at the meeting earlier this month while the Chancellor delivers his latest budget just after midday. Thursday’s retail sales release completes a busy week for UK data.
Technical
£-usd
A third consecutive advance has seen the pound close back above the 200 day moving average (1.5860) for the first time since the beginning of the month. Momentum has turned positive and we cannot rule out additional gains although strong resistance remains at 1.5985/1.6000 should yesterday’s 1.5915 high give way. Support now at 1.5840/25, 1.5795, 1.5760, 1.5720 and 1.5675 protect last week’s 1.5605 low.
£-eur
The pound has straddled the 1.2000 level for the last four days but with yesterday’s advance falling just short of the 1.2080 mid February corrective high, we open today on the back foot and looking towards support at 1.1975. Should this level give way, 1.1920/15 is likely to come into play then 1.1875/70. Resistance today at 1.2055, 1.2070/80, 1.2100 and 1.2165.
Analysis of further currency pairs, forward contract pricing, and information on limit or stop loss orders is available at any time on request.
Telephone 0131 476 7371
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