GBP/EUR Hits One-Month High as Upbeat UK GDP Figures Boosts Pound

Pound Firms on Reopening Optimism

The Pound (GBP) continued to catch bids through yesterday’s trading session as Sterling sentiment was bolstered by economic optimism in the UK.

This followed Boris Johnson’s confirmation on Monday evening that coronavirus restrictions would be eased again next week, further boosting hopes for a strong economic rebound this year.

The UK’s latest GDP figures look to extend the upside in the Pound this morning, and have pushed the Pound Euro exchange rate to a one-month high. The data revealed a smaller-than-expected contraction of growth in the first quarter, and a surprisingly strong expansion in March.

Euro Buoyed by Rising German Economic Sentiment

The Euro (EUR) made modest gains on Tuesday following the release of the latest German ZEW economic sentiment index.

May’s index printed well above expectations as it jumped from 70.7 to 84.4, with economic sentiment in the Eurozone’s largest economy striking its best levels since February 2000 as the EU’s accelerating vaccine rollout bolsters the outlook for the next six months.

Coming up today, the Eurozone’s latest industrial production data could help to further buoy the Euro, if factory output rebounded as expected in March.

US Dollar Subdued despite Downbeat Mood

The US Dollar (USD) was left muted through yesterday’s trading session, in spite of a prevailing risk-off mood which would normally have helped to lift the safe-haven appeal of the ‘Greenback’.

This appeared to stem from ongoing concerns over Friday’s disappointing payroll figures and its potential impact on the Federal Reserve’s future monetary policy.

Looking ahead, the spotlight today will be on the US consumer price index.

April’s CPI figures are forecast to report that US inflation accelerated to a dizzying 3.6%, but with the Fed having already stated that it is willing to temporarily let inflation run above target without taking action, will the surge in price growth and pressure on consumer spending be seen as USD negative?

Canadian Dollar Dented by Drop in Oil Prices

The Canadian Dollar (CAD) ticked lower on Tuesday as a drop in oil prices undermined the appeal of the commodity-linked ‘Loonie’.

Australian Dollar Slumps on Ratings Warning

The Australian Dollar (AUD) fell back overnight on Tuesday following a warning from the Commonwealth Bank of Australia (CBA) that Australia’s credit rating is at risk of being lowered from AAA.

New Zealand Dollar Undermined by Risk-Off Mood

The New Zealand Dollar (NZD) also fell back in overnight trade as investors shied away from the risk-sensitive ‘Kiwi’ amidst a souring of market sentiment.

Data Releases

07:00 GBP GDP (Q1)

07:00 GBP Business Investment (Q1)

07:00 GBP Trade Balance (Mar)

07:00 GBP Industrial Production (Mar)

10:00 EUR Industrial Production (Mar)

10:00 GBP BoE Bailey Speech

13:30 USD Inflation Rate (Apr)

Matthew Andrews

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