Good morning, please see today’s entry to our Daily FX Market Commentary.
After the GBP has surged against the USD significantly during the end of last week, we have started just pulling back from the recent highs as we open again this morning. As the US have cut their growth and inflation forecasts, at the same time, the UK are starting to see better results – particularly in their inflation data.
Fears of uncertainty over the possible British exit from the Eurozone mean that the USD won’t be weakened too much vs the GBP but there are certainly a great deal of mounting signs that their interest rates won’t rise in line with forecasts during 2016.
Today there are few economic data sets due out, only really a Chicago based national activity index is of any note. It is tempting to expect a slow, fade of last week’s GBPUSD strength during the day.
The same trend as in the GBPUSD is playing out in the GBPEUR as well. It’s been a strong finish to the week for the GBP and against the EUR it’s been no different, reaching as high as 1.2860. This has begun to trail off now as we start the new week but it certainly has shown that the GBP Inflation data can add a strong show of support for possible rate rises later in the year.
The only information due today from the Eurozone is consumer confidence, which is looking not to show too much change (and remain negative) and the Eurozone current account which is showing a mixed reading with overall figures remaining unchanged to a degree.
Again, as with the USD, I suspect it may prove a day of slight ebbing of the GBP and allow the EUR to claw back a little of the losses from last week.
Despite a weaker Retail outlook the Pound has benefited from an inflation figure which shows that it is being sized up by investors to take another look at the potential for interest rate rises.
There is almost nothing of note on the economic calendar for the Pound.