Sterling traded in a much tighter range versus the euro and the US dollar yesterday in what seemed like a “let’s wait and see” day for traders. However, it was a positive day for UK economic data releases. UK Growth (GDP) figures were released in the morning session and showed that the UK economy grew faster in the first quarter of this year than previously estimated.

The Office for National Statistics (ONS) raised its estimate for growth in Q1 from 0.3% to 0.4%. Annual growth was also revised upwards, from 2.4% to 2.9%. Last year, as a whole, growth changed to 3%, the fastest rate since 2006.

Also released yesterday were consumer confidence figures which showed a recovery to a level not seen since the turn of the century, a result of ultra-low inflation, rising employment and improving wage growth. The GfK consumer confidence index increased to a level of 7, the highest since 2000.

This morning will see the release of UK PMI manufacturing data as well as the Bank of England’s financial stability report, but, of course, any headlines regarding Greece will take centre stage

Tuesday saw the euro weaken over 0.5% against both Sterling and the dollar, with the markets widely expecting Greece to default on its payment to the IMF on Tuesday evening. Even with nearly all economic data leaving Europe offering positive sentiment, it was unable to sway the tide with the markets solely focused on the ever closer Grexit.

This prediction was verified last night, making Greece the first Western county to go into arrears on its debt repayment to the IMF. Until this outstanding balance to the IMF is rectified there will be no further funding to Greece, or extensions granted. To further the Greek demise, Fitch downgraded its junk credit rating from CCC to CC. All of these events contributed to the euro weakening 0.33% immediately upon the markets opening this morning versus GBP.

All eyes will remain on the euro group meetings today, to see if any new information emerges.

The CB Consumer Confidence Index beat analysts’ expectations yesterday, rising to 101.4 from last month’s 94.6. Conference Board member, Lynn Franco, said “over the past two months, consumers have grown more confident about the current state of business and employment conditions, therefore people now seem more optimistic about the near term future.” Naturally, this will be viewed positively in the Fed’s eyes as they assess the health of the US economy before a potential rate hike in September.

Despite such a positive figure, the markets broadly failed to react to the announcement. GBP/USD actually saw gains before retracing back down to finish the day flat. Against the euro, the dollar clawed back some of Monday’s losses, finishing the European session around 1.1150 (IB). Given the current state of affairs in Greece, all eyes are focused on Europe and that seems to be dictating trends more so than data.

Today we have ADP Employment Change figures, as well as Manufacturing PMI, both of which are high impact data. These are forecast to read in line with consensus figures, but beware of any changes that may cause volatility.

FC Exchange is a trading name of Foreign Currency Exchange Limited. Registered office: Salisbury House, Finsbury Circus, London, EC2M 5QQ. Registered No.5452483. Authorised by the Financial Conduct Authority (No.511266) under the Payment Service Regulations 2009 for the provision of payment services. HM Revenue & Customs MLR No.12215508. Copyright © 2013 Foreign Currency Exchange. All Rights Reserved.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE

EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE

EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates. 

EUR/USD News

GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone

GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone

GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the Bank of England will begin the rate-cut cycle this year.

GBP/USD News

Gold ends Q1 2024 at record highs, what’s next?

Gold ends Q1 2024 at record highs, what’s next?

Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.

Gold News

Ripple's move above this key level could trigger nearly 50% rally for XRP

Ripple's move above this key level could trigger nearly 50% rally for XRP

Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.

Read more

US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount

US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount

The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.

Read more

Majors

Cryptocurrencies

Signatures