bank of england

Rate rise no longer a foregone conclusion

30th April 2018 Market Update

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🇬🇧 GBP – The pound fell dramatically on Friday morning following preliminary GDP results that came in at its lowest level since 2012. Naturally the news has thrown more speculation of the Bank of England not raising rates in the upcoming interest rate meeting.

Manufacturing, service and construction data will be the highlight this week. All of which are expected to improve on the previous month’s reading. Otherwise only political events could have any meaningful impact.

🇪🇺 EUR – German unemployment rate remained at the same level whilst unemployment change disappointed slightly. The euro did pick up in the afternoon though following US releases.

A little more in the way of releases from Europe this week. Unemployment rate on Wednesday for the bloc is expected to remain the same. The GDP figure is also due and is expected to fall slightly for the first quarter. Inflation on Thursday is expected to improve slightly. Retail sales are expected to improve on Friday to round the week off nicely for the euro.

🇺🇸 USD – Whilst the dollar made good ground on Friday versus the pound, come the end of the day it started losing out against the euro. GDP fell to its lowest level since September.

A lot more news is expected out of the US this week. The key pieces are the Fed’s interest rate decision and press conference. Whilst no policy change is expected the market will be eager to hear some forward guidance. Otherwise on Friday non-farm payrolls and unemployment rate are to be released.

 

Key Announcements

🇺🇸 USD
13:30pm: Core PCE – expected to rise to 1.9%

 

Summary: The pound continued falling on Friday following woeful GDP figures which naturally raised more of the ‘wrong’ questions surrounding the upcoming interest rate decision. Just one month ago it was almost a foregone conclusion that they would rise but now it seems a very different story. This week could be a strong one for the dollar which could compound the pound’s misery.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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