USD strengthens following strong US data.

USD: Strong US data yesterday caused the USD to strengthen bringing down the GBP/USD to the low 1.27s.

GBP: Little to move the GBP yesterday, with similar expected today.

EUR: Further comments from ECB speakers leave markets with further speculation surrounding interest rate cuts.

Market Sentiment: USD expected to show continued strength as the US economy continues to show resilience.

• USD: The US Dollar strengthened against the majority of its peers on Thursday following the release of some upbeat US economic data. The latest PPI data rose from 0.3% in January to 0.6% in February, ahead of forecasts it would remain at 0.3%. The producer price inflation data bolstered USD exchange rates in the aftermath of its release, as it served to undermine speculation of a FED interest rate cut in June, just a week before the Fed’s next interest rate decision. Retail sales increased by 0.6% in February following an upwardly revised 1.1% drop in January, however, came in below market expectations of a 0.8% expansion.

• GBP: While it ticked up against the Euro, the Pound was left rangebound against the majority of its other peers on Thursday as markets turned their attention to the Bank of England’s upcoming interest rate decision. The BoE will conclude its latest policy meeting next Thursday, and while the bank is widely expected to leave interest rates on hold, it may provide some guidance on when markets can expect it to begin easing monetary policy. Markets had previously forecast that the BoE would hold off until August before loosening its monetary policy, but some analysts now believe that a June cut could be on the table.

• EUR: The Euro (EUR) was pulled lower on Thursday by remarks from European Central Bank Governing Council member Yannis Stournaras. In an interview in London Stournaras called for the bank to start cutting interest rates ‘soon’, amid fears that the bank’s monetary policy could begin to choke off growth in the Eurozone. Stournaras suggested that the ECB needn’t be swayed by Federal Reserve policy and that it should pave its own way.

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