Sterling slips on Gross Domestic Product (GDP) downgrade

Today's Highlights

• Sterling slips on Gross Domestic Product (GDP) downgrade

• US data expected to be mixed

Current Market Overview

Ascension Day meant many European traders were not at their desks on Thursday and that may have explained the lack of volatility. The US Dollar did strengthen a little and Sterling did slip a little, but it was all a bit....beige. It wasn't a lack of data that made the FX market boring, though.

Britain's Q1 economic growth rate was downgraded to 0.2% from the previous estimate of 0.3%. That is sharply lower than the Q4 growth rate of 0.7% and that is a worry for the UK politicians, but Sterling didn't collapse. The lack of UK data today should leave Sterling to revolve around current levels, but there is a long weekend ahead in the UK and US, so traders may be tempted to remove some of their positions. As Sterling has slipped this week, there is scope for the Pound to recover somewhat before the 3-day break. Beware!

The little data we do have today comes from the US. The preliminary Q1 economic growth data is expected to show a rise to a quarterly 0.9% growth rate; up from Q4. If that is so, the US Dollar will strengthen, as a June US interest rate hike becomes more likely. That data doesn't have the spotlight to itself though; we will also see Durable Goods data (expected lower), the Michigan Consumer Sentiment Index (expected a little lower) and core Consumption and Expenditure data, for which the forecasts are very mixed. In other words, anything could happen. In such an unsettled environment, short-termism is a safe bet for currency risk management.

There isn't much more to report today. The G7 summit starts today, but there seem to be G7, or G8, or G20 meetings every few weeks these days. These guys do like to travel and they like to talk in summits so they can release meaningful communiques afterwards. Progress is always made and the meetings are always ‘constructive'. Change, though, is a little scarcer. Sorry for being such a cynic.

Next week is very light on heavy data... if you catch my drift. There is a lot of it, though, and we have a change of month, plus a shortened week for UK and US traders – and we have the US Employment report next Friday. All in all, there is a lot to anticipate.

And there are reports that, in Germany, a four-mile-long pipeline is being built to transport beer to an upcoming festival. The volume it is able to handle means festival-goers will be able to buy beer poured at a rate of six pints in every six seconds. This is always assuming the pipeline isn't tapped by anyone else, of course.

Have a great extended weekend, one and all. I'm online now looking for tickets to Germany and a plumbing kit.