Wednesday saw the pound advance against the USD, JPY and CHF as global equity markets advanced and risk appetite returned to the market. The pound has opened slightly higher today on the back of some encouraging net lending to individuals data yesterday, and looking forward to today’s data. 9:30 data will show the UK’s current account balance and the Final UK GDP for the first quarter of 2016. Any positive data here should provide additional support for the pound. We will see an overall Eurozone annual CPI flash estimate at 10:00 A.M. which is forecast to improve from last month’s figure of -0.1%. Later on this afternoon, data will include the ECB monetary policy meeting accounts, Canadian GDP m/m, US unemployment claims, and Mark Carney speaking at 4:00 P.M. Mark Carney will be speaking this afternoon at the Bank of England at an unusual press conference announced yesterday, most likely about the implications of the Brexit vote. The Bank of England has not released any details regarding the content of the speech, but market participants will be monitoring it very closely.
GBP/EUR: Currently trading at 1.2105
The pound strengthened overall during the day yesterday, as risk appetite returned to global markets and the pound rebounded from its lows earlier in the week. This may have been helped along by some encouraging data yesterday out of the UK which showed that lending to individuals in the UK is at a much higher level than it was in May.
Today brings a significant amount of data from the UK and Eurozone, so we can expect any movements in this pairing to be driven by the many data points out today, or by Mark Carney’s mysterious speech this afternoon.
GBP/USD: Currently trading at 1.3455
UK Net Consumer Credit and Mortgage Approvals figures were higher than forecast and came in at 1.503 billion and 67.04k respectively which continued the upward momentum for sterling which started the day in the mid 1.3300’s. Mixed results from the US as Personal Core Consumption and Spending figures came out as forecast whereas Pending Home Sales had a drastic move from a forecast of -1.1% to -3.7% which is the first annual drop since May 2010 and demonstrates the gap between buyers and affordable housing on the market. GBP/USD had a gain of 1.5% before resistance around 1.3500 which coincided with oil prices jumping by over 2% as US crude oil inventories decreased by 4.1 million barrels leaving USD to regain some ground.
The day starts off with UK Q1 GDP and Current Account data being released at 9:30am. There will be attention on the Current Account balances as it will be harder for the UK to bring the deficit down to zero outside of the EU. At 1:30pm we go stateside for Initial Jobless Claims and Continuing Claims which prior to the Non-Farm Payroll results out on Friday will give a strong indicator on the strength of the US economy.
EUR/USD: Currently trading at 1.1124
The euro managed to strengthen yesterday, as negotiations at the EUR summit picked up some pace. Crude oil inventory figures also disappointed, which weakened the greenback, allowing the pairing to trade above the 1.11 mark for most of the afternoon.
Eurozone data today will include annual CPI data this morning, which should affect the direction of the pairing throughout the day. Mark Carney’s comments this afternoon will be closely monitored by market participants and is sure to affect this pairing as well.