There was a lack of tier 1 economic data again yesterday for the UK, leaving Sterling in the hands of market sentiment. Sterling saw strength through the morning, posting gains against both the Dollar and the Euro. These rallies came to a halt when David Cameron spoke about the upcoming EU referendum. His high-stakes rhetoric brought attention to the negative effects of a ‘Brexit’, causing overall weakness in the Pound.
Today, the goods trade balance for March will be released. This will give an insight into Britain’s export market and how it has fared with the EU referendum looming. The most recent economic indicators have shown the negative impacts of the current uncertainty in the UK economy. The recent British Retail Consortium review on retail sales has shown that domestic spending fell flat in March. A positive move for the goods trade balance today would show an increase in exports and could ease the pressure building up on Sterling.
In a data light day, the Dollar showed signs of strength in the early morning yesterday against the Pound and the Euro as it was still digesting Friday’s jobs report. The growth in wages left the possibility of a June rate hike open, which pushed Cable down to a fresh three-week low of 1.4374 early Monday morning. The Pound rebounded briefly as the European traders took over, reaching daily highs of 1.4479.
However, continued Brexit fears halted any upward momentum for the pair. The Dollar fought back for the remainder of the day, with the Greenback posting its fifth successive day of gains. The Euro drifted slightly lower against the Dollar, as the lack of economic data for either currency took the focus off the pair and left the Dollar strength to push the pair down to its lowest levels in two weeks. EURUSD opened this morning at 1.1384, 0.11% lower than the previous day’s open.
The Euro saw a lot of volatility against the Pound in yesterday’s European trading session, but ended the day at only 0.1% higher than when it entered the European trading session. The single currency weakened to the 1.27 levels.
German factory orders data printed stronger than expected this morning – it showed a monthly increase of 1.9% for April. We have also seen positive growth in the trade balance figures for March, printing at 23.6 billion Euros, beating last month’s figure of 20 Billion. Both sets of data are positive for the single currency which could cause it to trade lower versus the Pound.
There were also signs of weakness for the European economy as the monthly import figures in Germany for March didn’t hit the target. There was a total decline of 2.2% in imports as the data printed at -2.3%, significantly lower than last month’s 0.1%.
Data to watch: 7am German March Trade Balance, Imports, Exports & Current Account. 9.30am UK March Goods Trade Balance, Total Trade Balance & Non-EU Trade Balance.
In our Brexit survey, you told us you wanted more information on what would happen to British expats should the UK vote “leave”. Well, we reached out to solicitors Turcan Connell to find out more about Brexit and the British Expat.