Soft dollar continues

UK Gross Domestic Product grew by 0.3% in the last three months of 2015, the slowest quarterly rate since the end of 2012. This will worry David Cameron as he has staked his re‐election campaign on the strength of the country’s recovery. While these results are disappointing, they are seen to be short‐lived as the UK is still widely expected to have a stellar year in terms of growth. British Chancellor, George Osbourne, was quick to take to social media saying “the economy continues to grow, but this is a critical moment and a reminder that you can’t take recovery for granted’’. While the news was disappointing it did not stop the pound’s advances as it gained 0.66% against the Greenback, recording highs of 1.5337IB. Cable may now be pricing in the more hawkish MPC minutes from last week’s meeting, as well as the more recent weak US data releases. On the whole, data remains light in terms of top tier data for the UK and we will be forced to wait until Friday before we see any potentially market‐moving data in the form of Manufacturing PMI. One point we should be aware of as the elections draw nearer is an increasingly erratic market.

Could Greece be getting closer to agreeing a deal? Apparently so, as Greek Prime Minster, Alexis Tsipras, announced he was confident that a deal could be reached with its international creditors within two weeks. A savvy move by Tsipras was to remove Finance minister, Yanis Varoufakis, from further negotiations as the outspoken minster was thought to have often clashed with other EU members. The next debt interest repayment of €750M is due to be paid to the IMF on the 12th of May, however, it remains to be seen if Greece will be in a position to make such payments. An interesting survey carried out yesterday showed that half of the international investor community believe Greece will leave the EU within the next 12 months. Overall, the news coming from Greece is positive and allowed the single currency to claw back some of the recent losses against the pound reaching lows of 1.3936 and finishing 0.20% up on the day. Data remains light in the EU today and we will be forced to wait until Thursday before we see any meaningful data with CPI figures.

The Conference Board Consumer Confidence Index increased in March and declined in April, missing analyst expectations of 102.6. The index now stands at 95.2, down from 101.4 in March. The present situation Index decreased from 109.5 last month to 106.8 in April. Tensions remain high in Baltimore as images of looting, rioting and fires shocked the world. It remains unclear how the US government can tackle this problem. Barack Obama has been unable to enact substantial policies to tackle inner city problems. Even the $500BN programme, offering free community college for low income students, has not helped the situation. We have a host of top tier data being released today. First up is GDP figures followed by Pending home sales. In the evening we have the FOMC statement and Federal Funds rate. The dollar has continued its slide against the pound today and at the time of writing this is trading at 1.5362IB which has surprised most. The sudden deprecation has caught most by surprise given the impending rate hike and current US economy.