Good morning,

We start the day with GBP/EUR under 1.18 for the first time since the 7th of February. A key driving factor for euro strength this week has been reports of Russian military de-escalation in Ukraine, as rounds of negotiations between the two sides concluded last night. In the last week, the pound has been the worst performing currency in the G10 down 1.73% against the euro and down 0.58% against the US dollar. All eyes will be on Q4 GBP figures this Thursday in the UK with expected growth at 1%, anything less and we could see the pound fall closer to 1.30 on the dollar and low 1.17s against the euro.

Inflation continues to cause concern across the world with supply line issues and the high price of oil to name but a few driving factors. Spain’s March preliminary CPI hits 9.8% vs 8% year on year. Spain’s inflation is rising at the fastest pace since 1985 with core inflation up to 3.4%, the highest since 2008. A similar pattern can be seen for North Rhine Westphalia with CPI for March at 7.6% vs 5.3% year on year. The biggest driving factor being fuel prices up 24.7% and household energy up 14.1%. The ECB isn’t expected to rise rates until Q4 but with inflation rising at this alarming rate there could be pressure to raise rates sooner.

Have a good day.

Josh Saunders, Senior Relationship Manager.

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