Strong economic data continues to support the pound

United States Dollar:

Both the UK Manufacturing and Industrial Production data printed stronger than expectations yesterday morning, coming in at 1.0% and 0.9% m/m respectively for March. These are very impressive numbers and will serve to boost expectations for an early rate hike by the BoE, perhaps as early as next spring, and certainly before the UK general election in May 2015. Although the UK PMIs were weaker than expected last week, these, too, were largely strong numbers – it’s data like this that will continue to lend medium-term support to the pound. In other ‘GBP-positive’ news, the IMF announced yesterday that they thought the UK economy would be the fastest-growing economy in the G7 this year and would grow by 2.9% in 2014, up from the estimate of 2.4% made in January. Meanwhile, USD/JPY was sold off following the BOJ monetary policy announcement on Tuesday morning (GMT) and the accompanying comments by the BoJ’s Kuroda. This, in turn, saw the USD trade softer against a range of currencies, leading GBP/USD to push through 1.67. The pair opens this morning at 1.6738, this after posting a high of 1.6753 overnight. Today, the focus will be on FOMC meeting minutes from the US. Fed Chair Janet Yellen was fairly hawkish in her accompanying statement last month, and so traders will be keen to hear how deep this hawkishness actually runs within the Fed. It will likely create some volatility this evening and will determine whether the USD continues to fall or retrace in the near-term.

We expect a range today in the GBP/USD rate of 1.6610 to 1.6800.

Euro:

EUR/USD also edged higher yesterday morning and got a further boost later in the day after the Bundesbank commented that monetary policy within the eurozone was already very accommodative. On a further positive note, the IMF raised their European growth forecasts for 2014 to 1.2% vs. 1.0% (forecast from January). EUR/USD pushed through stops at 1.3770, 1.3780 and 1.38, eventually trading to a high of 1.3808. The pair has remained well bid overnight and opens this morning in London at 1.3805. However, the single currency is a touch lower vs. the pound, owing in large part to the stronger than expected UK data released yesterday morning. GBP/EUR trades at 1.2130 currently.

We expect a range today in the GBP/EUR rate of 1.2090 to 1.2160.

Aussie and Kiwi Dollars:

AUD/USD pushed on through .9350 overnight and traded to a high of .9385. Better than expected housing finance data supported this move during Sydney hours and is keeping the pair well bid this morning. In fact, it’s now breaking through the overnight high, and it looks as though it may make an attempt at the .94 big figure. NZD/USD has gone with it and trades close to .87 this morning at .8695. As well as the FOMC minutes tonight, we also have Australian employment data due a few hours later – both releases have the potential to cause volatility tonight.

We expect a range today in the GBP/AUD rate of 1.7760 to 1.7940

We expect a range today in the GBP/NZD rate of 1.9145 to 1.9350.

Data releases for the next 24 hours:

AUD: MI Inflation Expectations, Employment Change, Unemployment Rate

EUR: No data

GBP: Trade Balance, RICS House Price Balance

NZD: Business NZ Manufacturing Index

USD: Wholesale Inventories m/m, FOMC Meeting Minutes