4th May 2017 Market Update
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?? GBP – Construction data came out better than expectation in the early hours of trading yesterday which caused the pound to strengthen, however it was a minimal movement.
Theresa May continued her rhetoric regarding the Brexit negotiations yesterday. There was a spanner in the works however, with a European newspaper leaking discussions between high ranking EU officials who had agreed to make negotiations difficult for the UK. There is even more talk of a big Brexit bill which must be paid before we officially leave. It is said that this could reach £100Bn.
UK local elections today are likely to cause more strong statements from the Government to ensure the public have faith in their strategy moving forward.
Today we have service PMI data being released at 9:30am, which is expected to be positive. This could cause some movement, however this will only be if the actual figure is far different from expectation. The Queen has called an emergency meeting this morning at 10 am, though no details of the reason have been given.
?? EUR – Preliminary GDP results from the Eurozone came out in line with expectations, which was slightly higher than the previous quarter. This could show signs of resilience in the EU economy in light of the political drama currently taking place. The French elections are moving more in favour of the young up and coming candidate Macron, which on the surface could be positive signs for the single currency, as he is a pro-EU candidate.
A strong reading in the services sector has helped the euro slightly this morning.
?? USD – Lots of US data out yesterday, notably ADP employment change, ISM non-manufacturing PMI and the FEDS interest rate decision and statement. ADP employment data came out almost inline with expectations and ISM non-manufacturing came out much better than predicted. The dollar enjoyed some strengthening from these key bits of data, but both boosts where short lived. The FED also kept rates the same, siting at 1%, with Janet Yellen in her speech following the rate decision, acknowledging a slight slow down in the US economy. This is a possible reason for not raising rates at this moment in time.
Weekly jobs figures and factory orders to be released this afternoon, though little impact is expected.
9.30am: Service PMI data came out in the morning for the UK.
The Queen holds emergency meeting.
1.30pm: Unemployment claims for the US to be released this afternoon.
Our View: The pound seems to be settling around the current levels against the dollar and euro. Any kind of unease in France surrounding the presidential election or progress with the Brexit negotiations may see the above levels breached, which would open up new highs in the currency markets.
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