Daily Currency News and Forecast: Pound Euro Rallies to a New One-Year High on Upbeat UK GDP Figures

Pound Lifted by Positive GDP Release, GBP/EUR Rallies

The Pound ticked higher on Wednesday as Sterling sentiment was bolstered by the publication of the UK’s latest GDP figures.

In the final release for the last quarter of 2020, growth was revised up from 1% to 1.3% according to data published by the Office for National Statistics (ONS), all but confirming the UK will avoid a double-dip recession.

The UK GDP improvement pushed the Pound Euro exchange rate to refresh one-year highs, while GBP/USD firmed at $1.37, hovering just below $1.38.

Coming up today, the UK’s latest manufacturing PMI could offer additional support to the Pound after March’s final figures jumped to a ten-year high.

EUR Muted as Core Inflation Falls, Euro Pound Falls to One-Year Low

The Euro was stuck in bottom gear yesterday as the Eurozone’s consumer price index failed to impress investors.

While headline inflation rose to 1.3%, its highest levels since the start of the coronavirus pandemic, core inflation unexpectedly slid from 1.1% to 0.9%, indicating the jump was mostly down to temporary price increases in fuel and energy.

Further limiting the appeal of the Euro was the news that France faces a new month-long lockdown as it struggles to contain surging cases.

Meanwhile, Germany’s latest retail sales figures printed below expectations this morning, likely putting further pressure on the Euro today.

However, the Eurozone’s manufacturing PMI publication this morning appears to have offset concerns over Germany’s poor retail sales figures.

The manufacturing PMI revealed Eurozone factories grew at a record pace during March, with the highest reading since the surveys began 24 years ago.

EUR exchange rates have strengthened as a result, with the Euro Pound exchange rate moving away from one-year lows.

US Dollar (USD) Rebounds on Biden Stimulus Announcement

The US Dollar spent most of yesterday’s European session on the back foot, retreating amidst improving risk appetite and a weaker-than-expected ADP employment release.

However, the US Dollar was able to claw back a large portion of its losses later in the evening as President Biden outlined his plans for a $2 trillion infrastructure stimulus package.

In the spotlight today will be the publication of the latest ISM manufacturing PMI, which could send the US Dollar higher amidst forecasts US factory sector growth in March will have beaten February’s two-year high.

Canadian Dollar (CAD) Bolstered by Strong GDP Print

The Canadian Dollar rallied on Wednesday, courtesy of Canada’s latest monthly GDP release, which reported domestic growth accelerated from 0.1% to 0.7% in January.

Australian Dollar (AUD) Slumps on Disappointing Data

The Australian Dollar trended lower overnight on Wednesday as AUD investors were dismayed after Australia’s latest retail sales figures and trade balance both printed below expectations in February.

New Zealand Dollar (NZD) Dips in Risk-Off Trade

The New Zealand Dollar also fell back in overnight trade as new lockdowns in Europe and a rebound in the US Dollar dented market risk appetite.

Data Releases

07:00 EUR German Retail Sales (Feb)

09:00 EUR Manufacturing PMI (Mar)

09:30 GBP Manufacturing PMI (Mar)

13:30 USD Initial Jobless Claims (27/Mar)

15:00 USD ISM Manufacturing PMI (Mar)

Matthew Andrews

Contact Matthew Andrews