Carney comments could cause Sterling sell off
Sterling couldn’t capitalise on the Dollar weakness yesterday, as Brexit fears continue to hamper positive Sterling sentiment. Cable had broken through the 1.4400 level but failed to maintain the momentum in the US trading session, opening this morning at 1.4379.
With very little data released yesterday, GBPEUR touched daily highs of 1.2764 before the pair traded downwards for the remainder of the day, opening this morning 0.6% lower. Gfk Consumer Confidence, released at 12.05am, remained at 0. Investors concerns over a potential Brexit are evident in this result.
Today, Mark Carney’s speech will be analysed for any Brexit related comments which, by now, will be almost unavoidable. The Sterling bears are waiting for any negative comments on the scenario to confirm their fears and trigger a sell off. The UK will also publish Current Account figures and the third and final gross domestic product (GDP) estimate for the final quarter of last year.
USD remained under pressure yesterday following the dovish comments from Fed Chair Yellen on Tuesday evening. The deteriorating expectation of higher interest rates was somewhat balanced by the better than expected ADP non-farm employment released, which traders will use as a precursor to Friday’s Nonfarm Payrolls.
A positive shock in today’s initial jobless claims could give the Dollar strength towards the end of the day. Chicago Purchasing Managers’ Index (PMI) is also due for release, which it is predicted to show a growth in business conditions, bouncing back from the contraction seen in February. Positive data from both sources should help ease the pressure on the Dollar.
The Euro hit seven-week highs yesterday as EURUSD gained momentum after the start of the US session and climbed to 1.1364, reaching its strongest level since February 11th. This result was enhanced when the German Consumer Price Index (CPI) came in at 0.3%. This was better than the estimated 0.2%. CPI for the Bloc is due today, and could have a similar effect to that of Germany’s if the data prints positive.
Data to watch: 7am Bank of England Governor Carney Speech. 7.55am GER Unemployment Rate & Change. 8.30am UK Gross Domestic Product (QoQ)(YoY), Consumer Credit (Feb) & Mortgage Approvals (Feb). 9am EUR Consumer Price Index. 11.30am European Central Bank Monetary Policy Meeting Accounts. 12.30pm US Initial Jobless Claims.