Banda Asia: Expectation of rate cut further postponed, GBP closes slightly higher

On March 18, the National Association of Realtors (NAR) in the United States released data showing that existing home sales contracts unexpectedly increased in February, marking the first growth in three months. This was mainly driven by falling mortgage rates and a slowdown in home price appreciation, attracting some homebuyers into the market. The Pending Home Sales Index, which measures signed contracts for existing homes, rose 1.8% month-over-month in February. Economists surveyed previously generally expected this indicator to decline by 0.6%. Pending sales refer to homes that have a signed purchase contract but have not yet completed the transaction, often serving as an important leading indicator for future existing home sales, as transactions typically close one to two months after signing. NAR Chief Economist Lawrence Yun stated that the slight increase in pending home sales mainly reflects improved affordability. However, he also warned that if rising oil prices push mortgage rates higher again, this positive trend could reverse.

Additionally, JPMorgan Chase revised its expectations for the Bank of England’s interest rate path, changing its forecast from rate cuts of 25 basis points in April and June 2026 to maintaining the benchmark rate unchanged throughout the year, with the next rate cut pushed back to the first quarter of 2027. This adjustment stems from a reassessment of the UK’s inflation trajectory and economic fundamentals. Recent Middle East geopolitical conflicts have triggered a rebound in energy prices, increasing short-term inflation pressures. Meanwhile, UK service sector inflation and wage growth have slowed more than expected. At the same time, the UK economy has shown more resilience than previously thought; although the labor market has loosened somewhat, consumption and investment remain relatively stable. This has led the Bank of England to adopt a cautious “wait-and-see” approach, avoiding premature easing that could trigger inflationary rebounds.

Today’s key data releases include the Eurozone February Harmonized CPI Year-over-Year, US February Producer Price Index (PPI) Year-over-Year, and US January Factory Orders Month-over-Month. Additionally, the Bank of Canada will announce its interest rate decision tonight, which warrants close attention.

Dollar Index

The Dollar Index declined slightly yesterday, closing lower on the daily chart, with the exchange rate around 99.60. Aside from profit-taking pressures weighing on the currency, technical selling near the 100.00 level also contributed to the decline. Moreover, the Fed’s hawkish expectations have cooled somewhat, continuing to exert downward pressure on the dollar. However, strong US economic data and the easing of rate cut expectations limited the downside. Today, focus on resistance around 100.00 and support near 99.00.

EUR/USD

The euro rose slightly yesterday, closing higher on the daily chart, with the exchange rate around 1.1540. Support came from short covering, and the euro also benefited from the dollar’s continued weakening due to profit-taking and the cooling of Fed hawkish expectations. However, weak economic data from the Eurozone limited the euro’s rebound potential. Today, watch for resistance around 1.1650 and support near 1.1450.

GBP/USD

The British pound rose slightly yesterday, closing higher on the daily chart, with the exchange rate around 1.3350. Support was provided by short covering, and the pound also benefited from the dollar’s continued decline amid multiple negative factors. Additionally, expectations for a rate cut by the Bank of England have been further delayed, supporting the pound. Today, focus on resistance around 1.3450 and support near 1.3250.