Asset Summary – Thursday, 13 March
GBPUSD is exhibiting a bullish outlook as the pound benefits from a weaker dollar and anticipation of sustained high interest rates in the UK. Reduced expectations for Bank of England rate cuts into 2025 are bolstering the currency. Upcoming GDP data and economic forecasts from the Office for Budget Responsibility will be crucial in shaping investor sentiment and potentially influencing the pair’s trajectory. Positive economic signals from the UK could further strengthen the pound against the dollar, while any negative surprises might trigger a correction.
EURUSD is likely to experience increased volatility and potentially upward pressure. The possibility of a ceasefire in Ukraine is a positive development that could reduce risk aversion and support the euro. However, escalating trade tensions between the US and the EU, specifically the imposition of tariffs and retaliatory measures, introduce uncertainty and could negatively impact the currency pair in the long run. The expectation of increased European defense spending and a potential shift in the ECB’s monetary policy stance, moving away from easing, could further contribute to euro strength, but any negative surprises on either front can swiftly change the EURUSD dynamic.
DOW JONES experienced a slight dip, continuing a three-day downward trend, even as broader market indices like the S&P 500 and Nasdaq Composite saw gains. While technology stocks fueled a market rebound, the Dow’s performance suggests it may not be fully benefiting from the tech sector’s strength. Factors such as newly implemented steel and aluminum tariffs and subsequent retaliatory tariffs from Canada could be weighing on the Dow, potentially impacting companies reliant on these materials or trade with Canada. The mixed signals, with positive momentum in tech countered by tariff concerns, indicate uncertainty for the Dow’s near-term direction.
FTSE 100 experienced an increase in value, driven by positive reactions to lower-than-anticipated US inflation figures, which tempered fears of aggressive monetary policy tightening. This positive sentiment outweighed concerns related to international trade disputes, particularly potential tariffs. Gains were concentrated in specific sectors, including aerospace (Rolls-Royce), banking, pharmaceuticals (AstraZeneca), and energy (Shell and BP), while a flight to safety also benefited gold miners like Fresnillo. The UK government’s stance on trade relations with the US further contributed to market optimism, suggesting a potential buffer against negative trade-related impacts.
GOLD’s price is being supported by ongoing trade disputes, which are driving investors towards the perceived safety of the metal. President Trump’s threats of new tariffs and possible copper trade protections are intensifying these concerns. Simultaneously, lower-than-expected US inflation figures are increasing speculation that the Federal Reserve may ease monetary policy, further benefiting gold. However, the future impact of tariffs on inflation remains uncertain, posing a risk that could reverse the current upward trend.