Morning Report

April 18, 2023

“GBPUSD is rising as UK’s pay growth fuels expectations of a BoE rate hike, while the cautious market sentiment weighs on the US Dollar. Later today, the German ZEW economic sentiment indicator will be released. Additionally, Fed official Bowman’s comments on monetary policy will be closely watched.”

Sam Cornford, Partner – Head of Trading


Main Headlines

BlackRock Inc. is set to begin the sale of failed banks’ securities, a process expected to run for several months and aimed at helping the Federal Deposit Insurance Corp. dispose of $114 billion of assets acquired from Silicon Valley Bank and Signature Bank. The move comes after BlackRock was hired by the government in April to manage the sale, highlighting the firm’s role as a regulator adviser in times of financial crisis.

The UK’s unemployment rate unexpectedly rose in the three months to February, reaching 3.8% – its highest level since Q2 2022. However, pay growth remained higher than expected, with annual growth for the three months to January revised up to 5.9% and holding steady for the following three months to February. With the Bank of England weighing the decision to raise interest rates further, the figures highlight the dilemma for regulators.



Sterling is well bid against most major currencies overnight. UK financial regulators have announced plans to establish a new body over the next two years aimed at encouraging competition in banking services by facilitating the use of third-party fintech apps. Open banking, which allows third-party firms to use customers’ banking data to offer tailored services, has helped to make the UK’s fintech sector the world’s third largest. Open banking is currently used by seven million consumers and businesses, following an order from the Competition and Markets Authority in 2018 requiring nine banks to share data with outside companies with customer consent.



Euro is stronger against the dollar and weaker against sterling this morning. The European Parliament is set to vote today on sweeping reforms aimed at making EU climate change policies more ambitious, including the upgrade of the bloc’s carbon market. The carbon market requires power plants and factories to purchase CO2 permits when they pollute, and has helped to reduce emissions by 43% since 2005. The reforms aim to meet the EU’s more ambitious climate change targets by cutting emissions by 62% from 2005 levels by 2030.



The dollar is weaker than most major currencies in the early morning trade. The US dollar experienced a decline after a significant overnight increase, as strong economic data in the United States boosted the possibility of a May interest rate hike by the Federal Reserve. The confidence of single-family homebuilders in April continued to improve for the fourth straight month, while manufacturing activity in New York state rose for the first time in five months. According to the CME FedWatch tool, the market is currently predicting a 91% likelihood of a 25 basis point rate hike by the Fed in May, with traders projecting rate cuts towards the end of the year.



European markets saw a slight increase as investors continue to monitor global economic conditions and corporate earnings. The pan-European Stoxx 600 index rose by 0.1% in early trade, after a lacklustre performance yesterday. Banks experienced a 0.9% increase, while mining stocks rose by 0.56%, though utilities fell by 0.5%. In Asia-Pacific markets, China’s economy grew more than anticipated, with a YoY growth rate of 4.5%, surpassing the estimated growth of 4% in a Reuters poll. Following the report, the onshore Chinese yuan saw a slight increase in strength. US stock futures were stagnant last night, following a rise in major averages to kick off a busy week of corporate earnings. Bank of America and Goldman Sachs will report before the bell today.


Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: UK March Jobless Claims
10:00 a.m.: Italy Feb. Trade Balance
11:00 a.m.: UK to sell bonds
11:00 a.m.: Germany April ZEW Survey Expectations
11:00 a.m.: Euro-area April ZEW Survey Expectations
1:30 p.m.: Turkey Feb. House Price Index
Informal meeting of EU environment ministers


Corporate Events

Earnings include Goldman, BofA


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