Sterling Rises Ahead of Local Elections and BoE Meeting

2nd May 2019 Market Update

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🇬🇧 GBP –  Yesterday, the pound was supported by manufacturing data and reports of the tone of Brexit talks between the Government and the Labour party had improved, with PM Theresa May hoping to conclude talks by next week. As a result, the pound strengthened across the board.

Today, focus will be on the Bank of England meeting, however it is unlikely the BoE will change its current policy, though any change in voting or talk of hikes will be watched closely. In addition, the UK will see local elections today which could be interesting in the light of the Brexit extension and the upcoming European elections, as most polls are suggesting that the Conservatives may suffer heavy defeats and losing many seats, which would could put further pressure on Theresa May to resign and thus Brexit plans impacted. Construction figures are also due this morning, expected to bounce out of contraction territory and could well help the pound further.

🇪🇺 EUR – With most of Europe off yesterday due to Labour Day and no economic data releases from the zone markets focussed on news the UK and US and the Euro traded at the mercy of movements in the pound and US dollar.

This morning manufacturing PMI’s will be in focus for Germany and the eurozone as a whole, with expectations now of change but the fgure still to remain in contraction territory, which could weigh on the single currency.

🇺🇸 USD –  Last night the Fed left the target rate range unchanged as widely expected and Fed Chariman Jay Powell stated that he sees no immediate need to move the interest rates higher or lower, as the central bank is still monitoring the under target inflation figures. The Fed has recently come under fire from President Trump to ease borrowing costs to keep growth solid as the US heads for its longest ever econimic expansion.

Today, jobless claims and factory orders will be in focus with an uptick expected to help bolster the dollar

 

Summary:
GBP: BoE and elections take front seat today
EUR: Dismal data weighs on the Eurozone
USD: Fed keep interest rates on hold but point out that inflation is below target


 

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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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