1 April, 2015
Yesterday was a good day for the Pound with the Office for National Statistics announcing that Q4 2014 GDP was higher than previously estimated at 0.6% for the quarter, rather than 0.5% and 2.8% for the year, rather than 2.6%. This was great news for the Pound and coupled with the news that the current account deficit had also dropped to 5.6% from 6.1%, allowed Euro to make significant gains across the board. Against both the Euro and the Dollar the rise was around a percent during the course of the day, and this certainly bucked the negative trend brought about by pre-election uncertainty that we had been experiencing.
Unfortunately this is likely to be a short term event – the Pound has already in fact resumed its downward movement – as the markets take another look at the polls and realise that all the good news in the world does not change the fact that we have no idea who is going to be holding the rudder of the UK economy in a little over a month’s time.
Today is all about manufacturing data, with numbers for Europe, the UK and the US all due out. In the UK, this is likely to provide another sound bite for whichever campaigning party deems them to be most positive for their cause, in Europe the figure is predicted to be the best for almost a year and could provide a much needed boost for the Euro, and in the US the figure is actually expected to drop slightly, so this could be interesting for the Dollar which has been supported by strong data of late, so might react badly to some negative news for a change.
In the background an interesting twist has happened in the Greece v Europe negotiation, with it being reported that Greece is set to meet with Russia on the 8th of April – the day before its 9th of April deadline to pay the IMF €450m. The expectation is that the meeting will be to discuss a loan package outside of that which has been agreed with the Troika, and will anger the Europeans immensely. Given Russia’s current disagreements with Europe, this could be exactly why they are getting involved. In short, more complications to an already complicated situation for the Euro, so unlikely to help matters.
Make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and how it will likely affect your upcoming currency purchase.
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