blackfriars bridge evening

Rate sentiment impacts pound

9th May 2018 Market Update

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🇬🇧 GBP – The pound continues to tread water whilst the market awaits Thursday’s interest rate decision and policy statement. Sentiment has gone from full confidence in a rate rise this week, to broad doubt that we will see anything at all. The associated pricing has seen Sterling lose considerable ground recently, compounded by the uncertainty regarding Brexit and the Customs Union position.

With no data out today, the pound will likely be vulnerable to further losses.

🇪🇺 EUR – There is a general feeling that the euro is largely living on borrowed time with regard to its ongoing strength. The signs are there that perhaps the economy is slowing and inflationary pressures may become critical at some point this year. For now, however, the single currency remains a strong performer and a lack of data today will likely see little movement.

🇺🇸 USD – The dollar has been the major performer of late, with a 5% increase in value over the past few weeks. Yesterday’s comments from President Trump regarding the withdrawal from the Iranian nuclear deal have not dampened the greenback.

This afternoon sees the release of PPI data, which is a major indicator of inflationary levels. This is forecast to be slightly lower than the previous reading. It is hard to see the dollar losing much position today.

 

Key Announcements

🇺🇸 USD
13:30pm: PPI data

 

Summary: A quiet day yesterday, with Sterling making no gains amidst a lack of economic data. The market continues to await Thursday’s interest rate decision and policy statement from the Bank of England.

 

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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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