Daily analysis 14.03.2017

The British Prime Minister received the green light to start the Brexit process from the last week of March. This caused the pound to lose value. The zloty remains stable, except for its relation against the pound, which nears its lowest value since November. Mixed data from the euro zone with a minor impact on the euro.

Most important macro data (CET – Central European Time). Estimates of macro data are based on Bloomberg information, unless marked otherwise.

• 13.30: The American PPI for February (estimates: 2.2% YoY; 0.2% MoM).
• 14.00: The Polish CPI for February (estimates: 2.1% YoY; 0.2% MoM).

Pound near its minimum

Yesterday, the Scottish Prime Minister, Nicole Sturgeon announced that she is intending to start the legislation process regarding the second independence referendum. However, this information had limited impact on the pound. As we indicated in yesterday’s analysis, there are groups that oppose this idea within Scotland alone.

However, the British Prime Minister, Theresa May, received approval for initiating the Brexit process in the last week of March. This caused the pound to overvalue significantly. This morning, the GBP/USD was pushed to the level of 1.21, which was its lowest level since January 17th.

The British currency may continue to fluctuate. Tomorrow, we will know the data regarding salaries in the United Kingdom. Moreover, the FOMC will announce its decision regarding interest rates and the potential amount of rate hikes between 2017 and 2019. If the British data is worse than expected and the Federal Reserve suggests more than three rate hikes, the GBP/USD may reach the 1.20 level.

Mixed data from euro zone

According to the ZEW index, the euro zone’s sentiment increased in March to its highest level since December 2015. Approximately 33% of surveyed economists claimed that the euro zone’s economic conditions will improve (5.5 percentage points more than in February). However, the amount of surveyed who expect the economic conditions to deteriorate decreased by 3 percentage points. The amount of surveyed who don’t expect any changes decreased by 2.5 percentage points. This caused the sentiment to reach 25.6 points.

Positive data regarding the sentiment has been balanced by a worse than expected reading regarding industrial production for January. According to Eurostat, this index increased 0.9% YOY (estimates: 1.3% YOY). Nevertheless, both of these readings had a limited impact on the euro. This morning, the EUR/USD was within a narrow range of 1.063-1.065. This pair may become more volatile due to the American PPI reading.

Stable zloty

The zloty was relatively stable this morning, except for its relation against the pound (the GBP/PLN reached its four-month minimum, at the level of 4.39.) The EUR/PLN was within the range of 4.33-4.34 and the USD/PLN was moving within the range of 4.06-4.08. However, we should keep in mind that tomorrow’s announcement from the FOMC may significantly increase the dollar’s fluctuations.

Today at 14.00, we will receive the data from the Polish Central Statistical Office, regarding the CPI for February. Over the past few months, this index has been increasing intensively, due to increasing raw materials prices. Currently, the market consensus is at the level of 2.1%. However, this shouldn’t cause significant changes in the zloty’s quotations, because we have been observing a global increase in CPI growth.