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UK manufacturing lifts Pound

UK manufacturing lifts Pound

GBP
The Pound gained ground against a basket of major currencies as stronger-than-expected UK manufacturing data left the Pound buoyant, despite headlines suggesting Brexit talks are likely to be difficult.

On the first day of trading after a long weekend across Europe, Sterling rose against the Dollar and the Euro amongst others after numbers showing UK manufacturing growth surged to a three-year peak in April, surpassing expectations. On the day the Pound was up by 0.3%, which is less than a cent off a seven-month high versus the U.S. Dollar, and was 0.2% higher versus the Euro.

USD

The Federal Reserve is widely expected to keep interest rates unchanged at the end of its two-day policy meeting this evening, but investors will look to see whether the central bank downplays the recent soft patch in the economy to leave the door open for a rate increase in June.

The greenback came away from its multi-week high after weak U.S. April auto sales data released yesterday added to recent worries about the outlook for the U.S. economy. Market participants may be wary of actively buying the Dollar against the other currencies for now.

Concerns about geopolitical risks such as North Korea have weighed on the dollar recently, however the focus is shifting to whether the strength of U.S. economic fundamentals is for real.

EUR

Data from the for the Eurozone in the form of the April manufacturing PMI index edged lower to 56.7, although it’s still a 6-year high. Eurozone unemployment held steady at 9.5% with a decline of nearly 1.0mn in the jobless total over the past year.

The data overall maintained confidence in the Eurozone and a firm GDP release on Wednesday would reinforce the positive sentiment, and the impact will be measured until there is a shift in rhetoric from the European Central Bank.

Polls continued to suggest a comfortable victory for Macron in the French Presidential election run-off with Le Pen struggling for a consistent Euro approach. However, Wednesday’s TV debate will be watched closely in case there is a major development.

Data to Watch:
n/a EUR GER 10-y Bond Auction. 08:00am EUR Non-monetary Policy ECB Meeting. 8:55am EUR GER Unemployment Change (Apr), Unemployment Rate s.a. (Apr). 9:30am GBP PMI Construction (Apr). 10:00am EUR Gross Domestic Product s.a. (QoQ) (Q1), GDP s.a. (YoY) (Q1), Producer Price Index (YoY) (Mar). 01:15pm USD ADP Employment Change (Apr). 02:45pm USD Markit Services PMI (Apr), Markit PMI Composite (Apr). 03:00pm USD ISM Non-manufacturing PMI (Apr). 07:00pm USD Fed’s Monetary Policy Statement, Fed Interest Rate Decision.

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