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Dollar weakness presents opportunities for the Pound and Euro

Dollar weakness presents opportunities for the Pound and Euro

Following fluctuations in the Asian market yesterday morning, Sterling managed to maintain steady levels throughout the day, holding GBPUSD above 1.4500. The upcoming EU referendum was again in the news as two more polls were released on this morning, both showing a very slight lead for the ‘Stay’ campaign. One of these polls was the latest from the ORB. It showed a 1% lead for ‘Stay’, down from the 5% seen in the previous ORB poll, meaning that the contest has tightened significantly over the previous week.

Yesterday also saw UK Prime Minister David Cameron and ‘Leave’ campaigner Nigel Farage appear to discuss the upcoming EU referendum in a TV “debate” that could have delivered more. Today all eyes will be on the upcoming April manufacturing production data from the UK.

The Greenback has failed to gain any momentum since Friday’s weak jobs data, and with no tier one U.S. data until the Fed’s policy meeting next week, the Dollar is likely to remain bearish until then. The June rate hike has effectively been ruled out, so investors will now focus on any hints for a July interest rate rise from the Fed.

The Dollar lost ground against Sterling; the volatility in the pair was driven by Brexit issues affecting the Pound. GBPUSD opens this morning at 1.4545, showing a loss of 0.70% for the Greenback from Tuesday’s open. EURUSD traded flat for the day, with no releases to drive either currency in a clear direction. It opens this morning at 1.1358, showing a fractional gain for the common currency from yesterday’s open.

The Euro weakened by 0.6% versus Sterling during yesterday’s European trading session as the unease surrounding the EU referendum continues. The single currency was undermined as European 1st Quarter Gross Domestic Product (GDP) figures came in 0.1% above expectations at 0.6%, surpassing the previous figure of 0.5%. However, this was not enough to strengthen the single currency against the Pound as it ended the day at around the 1.2804 levels. There is no Eurozone data out today.

Data to watch: 9.30am UK April Manufacturing & Industrial Production, year on year & month on month. 3pm UK May NIESR GDP Estimate.

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