25th May 2017 Market Update
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?? GBP – As expected, Sterling had a lacklustre day with no economic data amid the suspension of the election campaign.
Today could be marginally more interesting as we have the second estimate of first quarter growth figures. Although markets are expecting quarterly growth to remain at 0.3%, any divergence from this could cause some volatility for the pound.
?? EUR – ECB President Mario Draghi’s speech revealed no real surprises as to when the Bank might look to start tapering monetary stimulus measures. However, there were remarks in his speech that assured investors that the Eurozone’s finances can remain stable, despite concerns over inflation levels. The news did very little to move the euro with the currency finishing pretty much where it opened at the start of the day.
No news today, but nonetheless the euro remains the favoured currency of the month.
?? USD – Only news out of the US yesterday was existing home sales data. This disappointed, falling by 2.3% in April on account of a shortage of houses.
The Fed minutes revealed nothing new and reiterated expectations of staying on the path to normalising rates, so long as the economy can adjust from its recent temporary slowdown.
No significant data today, unfortunately, apart from the weekly jobless claims figures that don’t tend to move the markets by very much.
9.30am – Gross Domestic Products (Q1). Expected to remain at 0.3%.
1.30pm – Initial Jobless Claims. Expected to climb to 238,000 claimants.
Our View: Sterling’s performance for the week is still negative following a YouGov poll from the weekend that suggested the Tories lead over Labour has been halved. Today’s growth figures could cause a stir, however, this does seem unlikely given the markets are expecting the same estimate as previous.
Other than that, another quiet day is expected, but clients should be aware that the rate for Sterling to US dollars remains near the best levels since September 2016. Clients looking to convert euros to pounds should also be aware that the rate to do so is at the best levels since the end of March.
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