Yesterday was a fairly low key day for the UK and Europe with a handful of data from Italy (retail sales) and PPR figures for Spain, both of which came in as forecast. The UK had CBI Distributive Trades survey which came out at 4 compared to predicted 24 but being of little note, the pound didnt really change. The pound was still trading lower following yesterday’s inflation report speech by Mark Carney where he proceeded to talk down recent sterling strength indicating that interest rates would not be going up this year but more longer term. The pound lost some of the gains it had made recently but still traded at decent levels against all major pairings.
The main data for the day came in from across the pond, with the GDP figure which posted a much larger drop than any analyst anticipated. Growth dropped from the last reading of 2.6 percent to a negative figure of -2.9 percent which was a huge drop and much more than the predicted -1.7 percent. This drop in the growth figure is equivalent to a $15 Billion loss in the first 3 months of the year!
There is some feeling that this could just be a rogue number and the growth figures will equal out over the course of the year but in the real time trading time, the dollar weakened back off against sterling and the euro. We had seen some strength from the dollar coming back down below the 1.7 “magical” resistance point but it wasn’t to last long. The pound managed a half cent gain over the day as did the euro.
Today we have yet another speech to contend with from Mark Carney, so will we see similar pressure on sterling as we did the other day? If you have a currency transfer to make it might be worth getting in before the speech starts at 10.30am. This is happening alongside the release of the UK financial stability report which again could throw up some volatility. The rest of the day is filled with US data including jobless claims, personal income, inflation data and a couple of Fed member speeches. Overnight down under, New Zealand release trade balance and import/export figures.