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On February 12th, UBS Global Wealth Management stated in a report that despite the stronger-than-expected January non-farm payroll report, evidence of declining US inflation in the coming months should allow the Federal Reserve to maintain its plans for further interest rate cuts. Chief Investment Officer Mark Heifel stated that the firms baseline scenario remains a 25 basis point rate cut each in June and September, which "will create a favorable environment for stocks, bonds, and gold." Data from the London Stock Exchange shows that after the non-farm payroll data release, the money market lowered its expectation for the Feds total rate cuts for the year from approximately 60 basis points to approximately 50 basis points, and postponed pricing for the next rate cut from June to July.The Competition Commission of India has fined Intel (INTC.O) for its warranty policy.A Reuters poll found that 66 out of 74 economists believe the European Central Bank will keep its deposit rate at 2.00% until 2026.On February 12th, the State Financial Regulatory Commission released key regulatory indicators for the banking and insurance sectors in the fourth quarter of 2025. At the end of the fourth quarter of 2025, the balance of non-performing loans (NPLs) of commercial banks was 3.5 trillion yuan, a decrease of 24.1 billion yuan from the end of the previous quarter; the NPL ratio was 1.50%, a decrease of 0.02 percentage points from the end of the previous quarter. At the end of the fourth quarter of 2025, the balance of performing loans of commercial banks was 230.2 trillion yuan, of which the balance of normal loans was 225.1 trillion yuan and the balance of loans under special mention was 5.1 trillion yuan. At the end of the fourth quarter of 2025, the balance of loan loss provisions of commercial banks was 7.2 trillion yuan; the provision coverage ratio was 205.21%, and the loan loss provision ratio was 3.07%.On February 12th, the State Financial Regulatory Commission released key regulatory indicators for the banking and insurance sectors in the fourth quarter of 2025. At the end of the fourth quarter of 2025, the total assets of my countrys banking financial institutions in both local and foreign currencies reached 480 trillion yuan, a year-on-year increase of 8.0%. Among them, the total assets of large commercial banks in both local and foreign currencies reached 210.8 trillion yuan, a year-on-year increase of 10.8%, accounting for 43.9% of the total; the total assets of joint-stock commercial banks in both local and foreign currencies reached 77.8 trillion yuan, a year-on-year increase of 4.8%, accounting for 16.2%. At the end of the fourth quarter of 2025, the total assets of insurance companies and insurance asset management companies reached 41.3 trillion yuan, an increase of 15.1% compared to the beginning of the year. Among them, property insurance companies reached 3.1 trillion yuan, an increase of 7.5% compared to the beginning of the year; life insurance companies reached 36.4 trillion yuan, an increase of 15.4% compared to the beginning of the year; reinsurance companies reached 857.3 billion yuan, an increase of 3.5% compared to the beginning of the year; and insurance asset management companies reached 145.6 billion yuan, an increase of 14% compared to the beginning of the year.

GBP/USD falls to around 1.2370 as the BoE considers taking swift action ahead of UK inflation and US purchasing managers' indices

Alina Haynes

Apr 17, 2023 13:53

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On Monday morning, the GBP/USD currency pair retested an intraday low of 1.2390 after extending Sunday's decline from a 10-month high. To provoke adverse after breaking a four-week uptrend, the Cable pair explains the most recent concerns emanating from the United Kingdom (UK) and the optimism surrounding the Federal Reserve (Fed).

 

According to the Financial Times (FT), "The Bank of England is considering a major overhaul of its deposit guarantee scheme, including increasing the amount covered for businesses and compelling banks to pre-fund the system to a greater extent to ensure faster access to cash when a lender collapses."  The revelation fuels banking concerns in the United Kingdom and places pressure on the Cable duo.

 

UK Chancellor Jeremy Hunt's concerns about US subsidies may also be exerting downward pressure on the GBP/USD exchange rate as British firms rush to claim benefits before leaving the country. According to the news, "Chancellor Jeremy Hunt warned Sky News that Britain should be wary of any new subsidies, warning that they could undermine the economy and possibly even spark a protectionist trade war."

 

A larger-than-expected decline in US retail sales was unable to offset positive data from US industrial production and the University of Michigan's (UoM) consumer confidence index from the previous day. Despite this, US retail sales decreased by 1.0% in March compared to the predicted -0.4% decline and February's -0.2% decline. As opposed to the 0.2% market consensus and previous reading, Industrial Production increased by 0.4% in the month in question. The preliminary result of the University of Michigan's (UoM) Consumer Confidence Index for April, which increased to 63.5 from 62.0 analysts' expectations and previous readings, was also encouraging. In addition, inflation forecasts for the next year increased from 3.6% in March to 4.6% in April, while inflation forecasts for the next five years decreased by 2.9% during the same month.

 

Notably, Fed officials have recently appeared more hawkish than their BoE counterparts, which has exerted additional pressure on the GBP/USD exchange rate.

 

In this environment, the S&P 500 Futures exhibit modest gains following Wall Street's pessimistic close, while bond yields remain unchanged following weekly increases.

 

Moving forward, the current week is crucial for GBP/USD speculators as it contains a variety of high-quality inflation, employment, and UK PMI data. These data may be used to support the Bank of England's (BoE) officials' waning hawkish inclination and may keep bears in play. However, the US PMIs and Fed discussions should not be disregarded when looking for clear guidelines.

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