Sterling gains on better than expected growth figures | Smart Daily Currency Note
This week (Last week)
GBP/USD – 1.5450 (GBP/USD – 1.5310)
The main news this week came yesterday as GDP data revealed that the UK had avoided falling into an unprecedented triple-dip-recession after preliminary growth figures for the first quarter exceeded market expectations. After a quiet week for data, the GDP data revealed modest growth of 0.3% when just 0.1% had been anticipated, giving a much-needed psychological boost to consumers, businesses and sterling. The recovery is largely down to a strong performance in a dominant services sector coupled with better North Sea oil and gas output – propelling sterling to rise against all 16 of its major counterparts including reaching one month and two month highs against the euro and US dollar respectively. It has to be remembered that the theme amongst many expert market commentators, just before the Cyprus banking crisis, was that sterling was going to continue in free-fall which highlights the dangers of trying to second guess currency movements. The broader picture of the economy remains largely the same however, whilst these preliminary figures only account for under half of the total data. It is nonetheless an encouraging sign and will no doubt influence the Bank of England’s next meeting on monetary policy on the 8th of May. Be in touch with your trader to see if sterling can find further gains into the weekend.
The US dollar fell against both the euro and yen on Thursday after a variable week, as a recent batch of disappointing economic data fuelled concerns about the pace of recovery in the United States. Data released on Wednesday showed that orders for American Durable Goods fell by almost 6% in March, almost twice of what was expected and has led to some analysts suggesting that today’s GDP data may come up short of the median forecasts. Unemployment data released yesterday revealed that the number of people who filed for unemployment assistance in the US fell significantly more than predicted – providing some much needed contrast to the poor labour related data released recently. All eyes will be on today’s advance growth figures this afternoon which are expected to show solid growth of 3.1% – call in now to keep up to date with market reactions.