GDP to Drive Pound, Dollar

The ECB meeting contained no major surprises. Q1 GDP from UK and US are the main drivers today.

Previous Day's Market Highlights

The euro was broadly softer after the European Central Bank meeting contained no surprises. Expectations now are for updated economic projections in June and more guidance on the next step in the winding down of the QE programme at the July meeting. The dollar strengthened after euro-dollar saw a bid tone against the euro and poundfrom the afternoon session on, which ultimately pushed the rates below 1.21 and 1.39, respectively. Dollar strength put additional pressure on the euro, which saw sterling-euro jump back above 1.15 to some of its highest levels in over a week.
 
Reports of renewed tensions amongst the Conservative Party and the government’s defeat by the House of Lords over the EU Withdrawal Bill have added to the uncertainty for the pound this week.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1514 1.1600 1.1363 2.04%
GBP/USD 1.3918 1.4376 1.3894 3.35%
EUR/USD 1.2088 1.2414 1.2088 2.63%
GBP/AUD 1.8444 1.8478 1.8172 1.66%
GBP/NZD 1.9738 1.9755 1.9171 2.96%
GBP/CAD 1.7928 1.8181 1.7751 2.37%

Today's Market Highlights

The main items on today’s calendar are preliminary estimates of Q1 GDP from the US and the UK. US GDP often slows during Q1 due to seasonal factors and economists have been expecting slower UK growth given softer PMIs and other indicators. Slower UK growthcould weigh on the pound (09:30 BST) as investors watch the remaining data out between now and 10 May for signs the BoE could still be on track to hike rates. US figures could also weigh on the dollar this afternoon (13:30) but are unlikely to weigh on rate hike expectations (currently over 90%) unless the release significantly misses estimates. Any surprises to the upside could instead see currency strength.
 
BoE Governor Carney speaks this afternoon at the launch of the BoE’s econoME education program (15:00), which investors will keep an eye on for any discussion of monetary policy.
 
Highlights next week include the UK’s PMIs, the April US jobs report, and the Fed’s latest meeting, at which it is expected to keep interest rates on hold but leave the door open for a rate hike in June.  

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP GDP QoQ (Q1) 0.3% 0.4%
09:30 GBP GDP YoY (Q1) 1.4% 1.4%
10:00 EUR Economic Sentiment Indicator (Apr) 112.0 112.6
10:00 EUR Consumer Confidence (Apr) 15.8 16.3
13:30 USD GDP (Q1) 2.0% 2.9%
13:30 USD Personal Consumption Expenditures QoQ (Q1) 2.6% 2.7%
13:30 USD Core PCE QoQ (Q1) 2.4% 1.9%
15:00 USD Michigan Consumer Sentiment Index (Apr) 98.0 97.8
15:00 GBP BoE Governor Carney Speaks
15:15 GBP MPC Member Haldane Speaks

Caxton