- UK Data Printing Poorly – Consumer confidence well down
- German CPI Prints as Expected – Euro slows as data becomes less impressive
- US GDP Disappoints – But personal consumption impresses
- Forecast: Eurozone Unemployment, CPI – Euro could move today
Pound Sterling (GBP) Stalls Following ‘Remain’ Rally
GBP UPDATE: Pound Sterling (GBP) Remains Strong as Week Ends, Hits 12-Week-High Against USD
While the Pound was unable to hold its ground against the Euro (with the common currency on an uptrend thanks to strong Eurozone GDP) on Friday, it completed another definite weekly gain against the US Dollar despite poor consumer confidence in the UK. According to Bloomberg, this marks Sterling’s first two-month gain against the ‘Greenback’ since 2013.
Earlier…
The Pound traded flatly against many of its major peers into Friday morning as markets responded to largely expected UK GDP from Wednesday and poor data from Thursday and Friday morning.
Thursday’s house price report from Nationwide showed that house price growth had slowed to 4.9% year-on-year, despite estimates that the previous figure of 5.7% would only drop to 5.0%. The Pound was left further uninspired by Friday morning’s UK GfK consumer confidence survey. While this was projected to enter negative territory of -1, the print came in at a surprisingly low -3 and reminded investors that despite the decreasing chance of a ‘Brexit’, British citizens are still lacking confidence in the economy.
Sterling investors will set sights on consumer credit and mortgage approval reports due later this morning, with mortgage approvals predicted to have accelerated slightly to 74.4k in March.
US Dollar (USD) Weak Despite Fed Hopes, GDP Disappoints
The Pound’s rally against the US Dollar gradually continues into the end of the week as the Federal Reserve’s latest policy decisions failed to restore widespread confidence in the ‘Greenback’. Frozen rates and slightly increased hopes of a June rate hike initially helped the US Dollar gain, but Thursday’s data saw USD slip.
Thursday’s annualised Gross Domestic Product (GDP) release came in at 0.5% from the previous score of 1.4%. This disappointed analysts who had expected it to slow less, to 0.7%. This was joined by optimistic personal consumption data however, which despite slowing from 2.4% scored a better-than-expected 1.9%.
US data is rounded off this week by Friday’s University of Michigan confidence score, due for release in the afternoon.
Euro (EUR) Sentiment Unenthusiastic after German CPI Dips as Expected
The Euro’s attempted gains against the Pound look unlikely to be sustained as the pair trades flatly and near the week’s opening levels. Preliminary German Consumer Price Index (CPI) scores released on Thursday afternoon indicated that inflation slowed from 0.3% to 0.1% as expected.
Unfortunately this slow inflation rate did little to inspire Euro investors and implied that the European Central Bank’s (ECB) extreme stimulus measures were not stimulating the Eurozone economy as hoped.
As a result, investors are likely to focus on today’s upcoming Eurozone CPI and unemployment rate reports, which may inspire a change in attitude towards the Euro going forward.
Australian Dollar (AUD) Fails to Advance on Risk, Dented by Data
While it traded flatly against the Australian Dollar yesterday, the Pound’s leap from Australia’s poor news earlier this week has been largely sustained. However, risk-sentiment is on the rise after the Bank of Japan’s (BoJ) latest policy meeting proved surprisingly uneventful, causing investors to set their sights on the risk-correlated ‘Aussie’.
Unfortunately, it’s likely that Friday morning’s private sector credit report weighed on AUD’s chances of recovering, as it scored a lower-than-expected 6.4%.
New Zealand Dollar (NZD) Maintains Hawkish RBNZ Strength
The New Zealand Dollar (NZD) did its best to hold ground against the Pound during Thursday’s session as investors continued to pile onto the ‘Kiwi’ following a surprisingly hawkish policy statement from the Reserve Bank of New Zealand (RBNZ). Many analysts had expected the central bank to hint at future rate cuts, but policymakers took a surprisingly neutral tone and NZD became one of the few currencies to make a definite gain over the Pound this week.
Its strength was supported further by a business confidence report released on Friday, showing that March’s 3.2 had increased to 6.2.
Canadian Dollar (CAD) Up on Oil Price Boost, Investors Await GDP
The GBP/CAD exchange rate fluctuated throughout Thursday before slipping in the Canadian Dollar’s favour on Friday morning as investors adjusted their positions on strengthening oil prices ahead of Canada’s key releases later today.
February’s Canadian Gross Domestic Product (GDP) is currently tipped to have improved from 1.5% to 1.6% year-on-year, but is expected to contract by -0.1% in its monthly print.
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