​EBC Markets Briefing | Pound eases against euro; Micro shares rebounded

The pound headed for a third daily loss against the euro on Monday after negative economic data, while concerns about the escalating conflict in the Middle East drove investors into the greenback.

Iran's Islamic Revolutionary Guard Corps vowed on Sunday to pursue and kill Israeli PM Benjamin Netanyahu. The Jewish country in return targeted key members of Iran's leadership.

Britain's economy stagnated unexpectedly in January after weak growth in the preceding months, which showed a loss of momentum even before the war in Iran that is likely to be a further drag.

In a fresh blow to the government's growth ambitions after a challenging start to the year, output in the service sector flatlined amid falls in recruitment activity and the hospitality sector.

Long-held expectations the ECB will keep its deposit rate steady through the end of this year remain intact among economists polled by Reuters. However, that outlook is on shaky ground.

Markets rewarded the pound with a nice bout of outperformance relative to the euro, but it may be tough for the pound to sustain its relative gains given an inflation rate comfortably above target.

The EUR/GBP is on the verge of a death cross, which bolstered the single currency's bearish bias. The base scenario is that the par will slip towards the strong support below £0.8620.

Asset recap

As of market close on 13 March, among EBC major products, Micron Technology shares led gains as the company completed acquisition of Powerchip Semiconductor Manufacturing Corporation's P5 fab site in Taiwan.

Adobe said CEO Shantanu Narayen will step down after a successor has been appointed, and he will remain as the design software company's chair. That more than offset a strong quarterly results and guidance.

Gold prices fell for a second ‌consecutive weekly decline, pressured by a stronger dollar and inflation worries driven by the Iran war, which weighed on rate‑cut expectations.

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