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On April 30th, according to foreign media reports, copper futures on the Chicago Mercantile Exchange (COMEX) continued to fall on Wednesday, closing at their lowest price in three weeks. A stronger dollar and soaring oil prices fueled concerns about inflation and economic growth, putting downward pressure on copper prices. The Federal Reserve kept interest rates unchanged, but three Fed policymakers dissented from the policy statement, reflecting a growing division within the Fed regarding whether to continue signaling rate cuts. Meanwhile, the two-month-long Iraq War between the US and Israel has led to a shortage of sulfuric acid, which is used in 20% of global copper production processes. In the medium to long term, green transition, electrification, and the artificial intelligence industry will help boost additional demand for this metal, which is widely used in the power and construction sectors, while copper mines face disruptions such as underinvestment and production interruptions.The Society of Motor Manufacturers and Traders (SMMT) reported that total UK car production fell 8.2% year-on-year in March to 72,511 vehicles.April 30th - With no signs of a resolution to the Iranian crisis, international oil prices rose for the fourth consecutive day, breaking through $110 per barrel. US President Trump stated that the blockade of Iranian ports would not be lifted until an agreement is reached. Trump discussed possible extensions of the blockade with oil executives; meanwhile, Iranian officials showed no signs of compromise, with the Supreme Leaders military advisor stating that Iran would respond if the blockade continued. Dennis Kisler, Senior Vice President of BOK Financial, stated, "The longer the blockade lasts, the more oil prices will rise. In the long run, this waiting situation may be a driving force for short-term increases in crude oil prices, but it could also be the condition needed to finally end this conflict."Trump praised the rise in Intels (INTC.O) stock price.Meta Platforms (META.O) CEO: We believe users will pay for the target-oriented AI features of the "high-end or high-computing-power version".

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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