GBPEUR falls below 1.15
With no tier one UK economic data released yesterday, markets were left waiting for evidence of the recovery potential as lockdown eases. Strong gains on equity markets, the FTSE 100 hit 13-month highs, and firm risk conditions gave some support to the Pound. There is still some caution over the Northern Irish protocol and trade friction with the EU. There were also expectations that the UK’s first mover vaccine advantage would fade, especially if the EU can pick up the pace.
Sterling was sold once it rose above 1.3800 to the Dollar and settled just below this level whilst the Euro settled below 1.1495. All in all a mediocre performance given the favourable global backdrop.
Sterling opens near 1.3765 to the Dollar and the Euro just below the 1.1500 level.
US retail sales surged 9.8% for March following a revised 2.7% decline the previous month and well above consensus forecasts of a 6.3% gain. Underlying sales increased 8.4% on the month after a 2.5% previously and also well above market expectations while the control group posted a 6.9% gain.
Spending was boosted by the receipt of personal payment cheques and favourable weather as February’s weather-related slump in Texas was reversed.
Initial jobless claims declined to a 12-month low of 576,000 in the latest from a revised 769,000 previously and well below consensus forecasts of 700,000. There was also a decline in continuing claims and pandemic claims also declined by over 1.0 million for the latest week.
The Philadelphia Federal Reserve (Fed) manufacturing index strengthened to 50.2 for April from a downwardly-revised 44.5 for March and close to record highs. There was further strong growth in new orders and output for the month with employment also increasing strongly. Upward pressure on input prices eased only slightly while prices received increased at a faster pace. The New York Empire manufacturing index also strengthened to 26.9 for April from 9.1 previously with a surge in new orders and stronger inflation pressures. Manufacturers in New York and Philadelphia both remained very confident over the outlook.
Despite the notably strong data, US yields declined after the data which limited potential dollar support and the US currency posted only a slight net advance amid expectations that the Federal Reserve would maintain very low interest rates.
The Euro continues to lick its wounds around 1.1955 against the Dollar whilst heading into Friday’s trading session. In doing so, the pair dropped slightly for the second consecutive day.
Thursday’s firm inflation data from Germany couldn’t help the regional currency as Italy’s growth forecast was downgraded and the escalation of the covid cases in the bloc weighed on the Euro. Looking ahead, the final reading of March’s Eurozone CPI could cause some volatility but most likely, it will be US data that will move the pair in one way or another.
As of writing, the Euro currently trades around the 1.1965 mark against its US counterpart.
Data to watch
15:00 – USD – Prelim UoM Consumer Sentiment