The 12-year high in a consumer confidence reading for the UK failed to prevent sterling from falling for the second day in the week as the US dollar remained firm after the Fed indicated that it has no plans to depreciate the greenback. Caution ahead of the UK GDP data later in the day also weighed on the pound. The UK GfK consumer confidence for March has risen to a 12-year high of 4 from 1 in February, beating the market consensus of 2, data coming in at 23.05 GMT showed. The market is now waiting for the final reading of the UK GDP data for the fourth quarter of last year. As per preliminary estimates, the UK economy expanded at a seven-year high of 2.7% from a year earlier in the December quarter from 2.6% in Q3. Any revision will have the potential to move the pound.
The euro drifted lower this morning with investors following talks between debt-hit Greece and its international creditors as Athens looks to reform its bailout obligations. Experts from the International Monetary Fund and the European Union are scrutinising a list of reforms that Athens has proposed in its bid to get the creditors to release 7.2-billion euros in much-needed loans that will help it avoid a default. Greece’s government says the reforms would help raise an extra three billion euros for its coffers without resorting to wage and pension cuts. But European authorities warned yesterday that there was still no deal. “We’re not there yet,” European Commission spokesman Margaritis Schinas told reporters. “This is why the talks should benefit from further fact-finding in Athens that should continue.” A defiant Greek Prime Minister Alexis Tsipras told lawmakers late on Monday that he wanted a deal but would not submit to creditors unconditionally.
The dollar rose against a basket of currencies this morning and is on track for its best quarter since 2008, bolstered by the diverging outlook for monetary policy in the United States compared to other major economies. The greenback remains below peaks hit earlier in March, having given back some ground over the past couple of weeks after the U.S. Federal Reserve signalled a more cautious outlook for U.S. economic growth. Still, the dollar has been supported by expectations that the Fed will start tightening monetary policy later this year. That poses a stark contrast to policies in the euro zone and Japan, where central banks are engaged in quantitative easing to support economic growth.