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March 2024 Update On Foreign Exchange Markets

foreign exchange markets

RegencyFX give their monthly update on developments in the foreign exchange markets. Significant market volatility occurred in March 2024 as a result of interplay between economic data, geopolitical developments, and monetary policy decisions made by central banks.

Global Economic Outlook: The world economy appeared to be growing moderately in March 2024. The performance of major economies remained consistent, with the US, China, and the Eurozone among them. Currency moves were triggered by positive economic indicators like lower unemployment rates, greater consumer spending, and increased industrial production.

Central Bank Policies: During this time, central banks were very important in forming the FX market. The US Federal Reserve proceeded cautiously, gradually cutting back on its quantitative easing programmes while keeping a careful eye on inflation. In contrast, the European Central Bank persisted in its supportive monetary policy to aid in the Eurozone’s economic recovery. The relative strength of the US dollar, the euro, and other major currencies was influenced by central bank policies and how they affected interest rates.

  • UK Currency Market:
    • The Bank of England was set to publish data on the UK’s international reserves and foreign currency liquidity in early April, which would provide insights into the UK’s official reserves managed by the bank.
    • The GBP faced downside risks, and there were intervention risks around theJPY andCHF. The market acknowledged that exchange rates are relative, moving away from a sole focus on the Federal Reserve.
  • European Currency Market:
    • The European Central Bank (ECB) decided to continue steering the monetary policy stance by adjusting the deposit facility rate (DFR) and providing liquidity through a broad mix of instruments.
    • The ECB’s Economic Bulletin indicated that the euro area economy likely stagnated in the final quarter of 2023, with some forward-looking survey indicators pointing to a pick-up in growth further ahead.

These developments suggest a cautious approach from investors in both the UK and Europe, with currency movements reflecting regional economic outlooks and central bank policies. The anticipation of rate cuts by the ECB indicates a potential shift towards a more volatile environment in the currency markets.

Currency ranges in March

GBP/EUR

High: 1.1769 on March 10, 2024.

Low: 1.1599 on March 22, 2024.

GBP/USD

High: 1.2878 on March 8, 2024.

Low: 1.2582 on March 22, 2024.

GBP/AUD

High: 1.9560 on March 5, 2024.

Low: 1.9258 on March 21, 2024

EUR/USD

High: 1.0960 on March 8, 2024.

Low: 1.0771 on March 29, 2024.

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