How can small food businesses absorb the shock of higher costs, without pricing out customers?
- Pound vulnerable after latest Brexit rejection
- Weaker Eurozone inflation may drive euro losses
- US dollar looks for rallying point on retail sales data
- Large contraction in manufacturing across Eurozone
Pound lacks support amid Brexit confusion
After MPs voted to reject Theresa May’s proposed withdrawal agreement once again the pound came under renewed pressure as the odds of a no-deal Brexit increased.
Demand for the pound could deteriorate further this morning if March’s manufacturing PMI weakens on the month.
Signs that the manufacturing sector continued to lose momentum in March would undermine confidence in the economic outlook, with the risk of a weak first quarter gross domestic product rising.
On the other hand, a resilient manufacturing PMI may not be enough to shore up GBP exchange rates in the face of ongoing Brexit uncertainty.
Euro trends lower ahead of Eurozone inflation data
Data out this morning indicated a severe contraction in Eurozone manufacturing output, with Germany leading the way down as its March PMI recorded a far-below-expected 44.1.
The mood towards the euro could soured further today if the latest Eurozone consumer price index falls short of forecasts.
After the corresponding German inflation data unexpectedly eased last week investors are wary of another downside surprise.
However, if inflation holds steady on the year in March this could offer the euro and European Central Bank (ECB) policymakers some cause for confidence.
Steady inflation would limit the risk of the ECB loosening monetary policy in the months ahead, to the benefit of the single currency.
US dollar softens in response to market risk appetite
An improvement in market risk appetite saw the US dollar losing ground ahead of the weekend, driven by reports of progress towards a US-China trade agreement.
Even so, USD exchange rates could find a rallying point this afternoon if US data points towards a greater sense of resilience within the world’s largest economy.
An uptick in advance retail sales would bode well for the economic outlook, with higher levels of consumer spending helping to drive growth.
However, any signs of increased consumer caution may encourage further US dollar selling.
Monday, 1st April 2019
09:30 GBP Manufacturing PMI
10:00 EUR Eurozone Consumer Price Index
13:30 USD Advance Retail Sales
15:00 USD ISM Manufacturing Index
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)