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Rudd resigns and Pound continues migrating south

Rudd resigns and Pound continues migrating south

GBP
A provisional estimate of Q1 GDP growth was reported at 0.1%, significantly below forecasts of 0.3% and the weakest quarterly figure for over five years. Year-on-year growth was held at 1.2%, down from 1.4%. The ONS stated that the weather had only a limited impact and market sentiment deteriorated, adding to momentum triggered when the futures market revised the chances of a May rate hike from 50% to near 30%. Sterling plummeted to lows near 1.3750 against the Dollar and near 1.1360 against the Euro.

Bank of England Governor Carney gave no comment on the economy or monetary policy so there was limited respite for the Pound. UK PMI data releases will be scrutinised for evidence that better weather will produce better data during April.

Sterling was unable to regain lost ground this morning and (former) Home Secretary Rudd’s resignation added to political uncertainty.

USD

The Greenback, in terms of the US Dollar Index which measures the currency against a basket of its major rivals, continues its march higher at the beginning of the week.

The demand for the Dollar stays firm today despite yields of the key US 10-year benchmark seeming to have lost some momentum as of late, retreating from multi-year tops beyond the psychological 3.0% level. The index, however, is up for the third week in a row so far today, while Dollar speculative net shorts moved to three-week lows on the week to April 24, as per the latest CFTC report.

Today is a busy day data-wise in the US calendar, with inflation figures tracked by the PCE due later along with Personal Income/Spending, the Chicago PMI and Pending Home Sales for the month of March.

EUR

The Eurozone Economic Sentiment Index (ECI) came in on Friday above forecasts but unchanged at 112.7 for April. This was a result of industrial sentiment improving slightly and further improved German unemployment data.

That said, with US GDP rising above expectations, the Euro came under pressure with the break of 1.2100 triggering fresh selling and three-month lows near 1.2050.

Looking ahead, it’s a busy week for the Euro as we have German Consumer Prices today, Eurozone GDP on Wednesday and inflation data on Thursday. All three of these events have the potential to move the Euro.

Data to Watch:

n/a AUD RBA’s Governor Philip Lowe Speech
13:00 EUR Harmonised Index of Consumer Prices (YoY) (Apr)
13:30 USD Core Personal Consumption Expenditure – Price Index (YoY) (Mar)
13:30 USD Personal Spending (Mar)
13:30 USD Personal Consumption Expenditures – Price Index (MoM) (Mar)
13:30 USD Personal Consumption Expenditures – Price Index (YoY) (Mar)
13:30 USD Personal Income (MoM) (Mar)
13:30 USD Core Personal Consumption Expenditure – Price Index (MoM) (Mar)
14:45 USD Chicago Purchasing Managers’ Index (Apr)
15:00 USD Pending Home Sales (MoM) (Mar)

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