By Ashley Finill
Last week Sterling continued feeling the strain due to the ongoing conflict in the middle east and for the time being, there doesn’t seem to be any sign of the war coming to an end. Yesterday, US president Donald Trump said that he now wants Iran’s oil and has said the US military could seize Kharg island as more of their troops arrive in the region. It was only last week that Trump had been suggesting that the war would be coming to an end as deal was on the table. However, Iran denied those claims and now tensions in the region are rising again. The Strait of Hormuz continues to be blocked with no oil coming out and as a result, oil prices continue to surge, with the UK feeling the pinch at the forecourts for petrol and diesel prices as they continue to soar. This has added unwanted inflationary pressure for UK as it heavily relies on oil from the region.
Inflation and Cost of Living Pressures Build as Pound Continues to Weaken
The conflict in the middle east is already having a knock on effect for the UK economy as the it enters the second month. The cost of living has already been impacting the UK with higher food prices and tax rises announced in the most recent budget but now prices for petrol and gas are set to rise. Last week, inflation for February came in at 3% but next month’s figure is expected to rise and economists are predicting that inflation could rise to over 4% by the end of the year. The Bank of England have already been cautious, at their last meeting over a week ago they held interest rates where before the conflict began a cut had been expected. With the situation in the middle east volatile and uncertain this will keep the pressure on the pound. Last week, Sterling lost around a cent on the Euro after a promising rise on the single currency at the start of the year. Also, the Pound has seen continued losses on the Dollar, losing over 2 cent over the last month and overall 6 cents since the end of January. Should anyone have Dollars to bring back into Sterling now is great opportunity.
Data releases this week
Monday
10am – EU – Business Climate, Consumer Confidence & Economic Sentiment Indicator
13pm – EU – Consumer Price Index & Harmonized CPI
3pm – US – Fed Chair Powell speech
3pm – US – Fed Williams speech
Tuesday
1am – AUS – RBA Meeting Minutes
7am – EU – Retail Sales
7am – UK – GDP
7.45am – EU – CPI
8.55am – EU – Unemployment Change
10am –HICP & CPI
1.30pm – CAD – GDP
2pm – US – Housing Price Index
3pm – US Consumer Confidence & JOLTS Job Openings
Wednesday
8am – EU – HCOB Manufacturing PMI
10am – EU – Unemployment Rate
1.15pm – US – ADP Employment Change
1.30 pm – US – Retail Sales
2.30pm – CAD – S&P Global Manufacturing PMI
3pm – US – ISM Manufacturing Employment Index, New Orders Index & PMI
Thursday
1.30am – AUS – Exports, Imports & Trade Balance
9am – EU – Economic Bulletin
12.30pm – US – Challenger Job Cuts
1.30pm – US – Initial Jobless Claims
Friday
1.30pm – US – Nonfarm Payrolls
2.45pm – US – S&P Global Composite PMI (Mar)
3pm – US – PMI