UK GDP expected to drop today

This week started off particularly slow with no major economic data to drive exchange rates. It was therefore more of the same continuing on from last week, with the USD on the back foot ahead of Wednesday’s interest rate decision where a further hold on rates is expected for at least another month or 2. Cable hit a 7 week high yesterday following weaker Services PMI figures for the US, providing an excellent opportunity for USD purchasers as these higher rates may only be available for a short window with the UK elections around the corner and the possibility of a US rate hike in the summer.

GBP/EUR continues to consolidate within last week’s small range with both currencies performing well recently, shrugging off obvious concerns over Greece and the election outcome. Sterling in particular is fragile to any bad news in the lead up to the election as the expected softening in exchange rates is yet to kick in with sterling markets awaiting a negative trigger. Could today’s Q1 GDP figures be the tipping point? After recent PMI shortfalls and last week’s poor Retail Sales figure, growth is expected to have slowed in the first quarter of 2015, from 3% on the year to 2.6%. If this is confirmed, or if actual results are even lower then this could signal the end of the pounds recent good run and turn sentiment towards the negativity of the election results.

This afternoon we also have April’s Consumer Confidence data for the US at 3:00pm with an increase expected. To discuss your options to take advantage of current exchange rates, call you broker today on free-phone 0800 043 2623.