GBP/EUR – Weakness in GDP Figures Sees Pound Stuck at Opening Levels
The Pound Euro exchange rate hit its highest level in 2017 at the beginning of today’s session as traders expected positive GDP figures for the final quarter of 2016. However, Sterling quickly retreated from that level once the data was released. Although quarter-on-quarter growth was revised higher to 0.7%, year-on-year growth was revised lower to 2%. Additionally, figures showed that business investment had fallen by -1% and that strong consumer activity remained vital for the UK’s economic growth. Only weakness in the Euro has prevented the Pound from dropping into negative territory against the common currency.
GBP/USD – Slumps on Bets of Hawkish FOMC Meeting Minutes
The latest poor GDP figures have seen investors selling out of the Pound, pushing GBP/USD down -0.3%. Weakness is being exacerbated by trader optimism ahead of the release of February’s Federal Open Market Committee (FOMC) meeting minutes. The House of Lords could come to the Pound’s rescue, however, if it votes to approve amendments to the Article 50 bill. This would help to curb Theresa May’s attempts to secure a ‘Hard Brexit’, although Sterling may not get much of a boost as the amended legislation would have to go back to Parliament for approval first.
USD/GBP – FOMC Minutes to Show Fed are Getting Ready to Hike Again?
Numerous comments from several Federal Reserve officials over the past few days have suggested that the Fed is becoming more hawkish on the monetary policy outlook. While several have only hinted at March being a ‘live’ meeting, Philadelphia Fed President Patrick Harker has explicitly stated that he thinks March could witness policy tightening. Today’s minutes will reveal how split the FOMC was on the idea of leaving rates frozen at the meeting that took place earlier this month. If the minutes show strong dissent, the US Dollar is likely to rise even further.
EUR/USD – Falls as Investors Run for Safer Assets on French Election Fears
Having been stung before by their overconfidence in victories for ‘Remain’ and Hillary Clinton, during the UK referendum and US elections respectively, investors are becoming increasingly wary of the potential for the French Presidential elections to shake up Eurozone politics. France is just one of the countries seeing rising populism, with far-right candidate Marine Le Pen’s popularity still on the increase. This has unsettled investors as Le Pen has claimed she will withdraw France from the Eurozone, which could threaten the future of the entire bloc. Cautious of getting caught out again, investors are therefore withdrawing to safer assets, leaving the Euro to US Dollar exchange rate to fall.