Sterling Continues To Take Advantage of Dollar Weakness
Yesterday we saw Sterling continue its rise against the US Dollar and Cable hit eight week highs. This was despite worse than expected UK GDP figures and continued uncertainty regarding the General Election, although we did see the UK nationwide housing prices data exceed market expectations.
The US Dollar is suffering at the moment from a slew of weak data with the markets having seen poor Nonfarm Payrolls data, negative industrial production, weak inflation, weak retail sales and poor consumer confidence in the last few weeks. This has started to diminish the prospect of an imminent interest rate hike in the US. Today, the US announce their latest rate decision and as there is no press conference, the language in the accompanying statement will be pored over for clues as to where we go next. This will be preceded at lunchtime by the latest US GDP figures. These are not expected to be particularly impressive with low oil prices, the strong Dollar and inclement weather all being blamed for a lack of growth.
The Euro is also regaining ground on the Dollar but not against the Pound as the Greek situation continues to rumble on in the background. Today, we are positive that a solution will be found with the new negotiating team in place. Whilst Tsipras seems confident, he has also commented that if any deal falls outside of the mandate that got him elected he may seek a referendum on the bailout. How they could afford to do this is anyone’s guess.
Apart from the headline US GDP figures and Fed rate decisions, we also have consumer confidence from the Eurozone and CPI from Germany.