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Dell (DELL.N) shares rose to 10%.On September 11th, the preliminary reading of the University of Michigan Consumer Sentiment Index for September came in at 47.8, marking the second consecutive monthly decline, though the drop was less than 4 points. Both Democrats and Republicans saw significant declines, while independents remained largely unchanged from August. Expectations for personal finances and business conditions over the next year fell sharply. With rebounding fuel prices and escalating trade tensions, consumers anticipate greater pressure on their wallets in the future. Five-year expectations for business conditions remained stable, but the reading was well below historical averages, suggesting that consumers believe the new risks emerging this month may not further worsen the long-term outlook. Overall, consumer confidence is currently 16% lower than before the start of the Iran conflict in February and 13% lower than a year ago. Inflation expectations for the next year jumped to 4.6% this month from 4.0% last month, the highest reading since June. The current reading significantly exceeds the 3.4% in February before the Iran conflict and also surpasses all readings for 2024. Long-term inflation expectations rose slightly to 3.4%, ending three consecutive months at 3.3%. These expectations remain above the 2.8% to 3.2% range for 2024.The preliminary reading for the U.S. five- to ten-year inflation rate in September was 3.4%, compared to a forecast of 3.3% and a previous reading of 3.30%.The preliminary reading for the US one-year inflation rate in September was 4.6%, down from the expected 4.2% and the previous reading of 4.00%.The preliminary reading of the University of Michigan Consumer Sentiment Index for September was 47.8, below the expected 51 and the previous reading of 51.7.

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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