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Sterling slips on slowing data and politics

Published: Monday 30 April 2018

  • Euro shudders as German retail sales slip and Italian elections are mooted
  • US data diary includes jobs and rate adjustments
​​By David Johnson

Overnight we heard that China’s manufacturing and service sector Purchasing Managers’ Indices (PMI) were better than forecast. That’s great news for the countries that supply the behemoth of China’s economy. So the Australasian Dollars and many Asian currencies strengthened on the news. The GBPAUD, rate for example, was down below A$1.82 at the start of play in the UK.
Politics and poor economic performance pick away at the Pound
Sterling is weaker after the British Home Secretary bowed to insurmountable pressure and resigned following discrepancies over her version of events with regards to targets for ejecting illegal immigrants. That wasn’t the only story though, there are rumours the Brexit secretary is on the edge of resigning as well. Softer UK data is also diminishing the expectations of a May interest rate hike from the Bank of England.  There is a plethora of UK data in the week ahead, so Sterling may well be in for a bumpy week.
Euro could have a bumpy ride this week
There is a perception Italy will be in for another election very soon and that rumour is being fuelled by Silvio Berlusconi. Overnight, news of a sharp drop in German retail sales has weakened the Euro. A minus 0.6% month on month figure was wildly at odds with the market forecast of a gain of 0.8%. The Eurozone’s big data of the week is the first estimate of Q1 economic growth. A forecast slowdown from an annualised 2.7% in Q4 to 2.5% (or perhaps less) in Q1 would weigh on the Euro.
US Dollar could have a rough ride, too…
US personal income and expenditure data is due later today, along with the Chicago Purchasing Managers’ Index, and Pending Home sales data. All will influence the US Dollar, but there is a Federal Reserve rate decision later in the week and Friday brings the April Employment Report. So the US Dollar is in for a busy and rough and tumble ride this week.
Commonwealth currencies await key data
We will also get an array of data from Australia and New Zealand, as well as Gross Domestic Product (GDP) data from Canada. All in all, there will be few opportunities for traders to kick back and relax, but the UK weather is telling us not to bother anyway.
TV Terrors

I hope yours is a good week. All I hope for is a week in which I don’t hear Barry Scott’s voice at all, the Trivago people start dressing the very attractive Gabrielle Miller in some more flattering clothes, the words Go Compare don’t feature in any way, the letters PPI don’t reach my ears, Nicole Scherzinger stops getting yoghurt on her nose and the Sales at DFS and Oak Furniture Land come to an end. That’d be just peachy.
Thought for the day

People say smoking will give you diseases. I am confused, though. How come smoke cures salmon and bacon?

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR All Day The Economic and Financial Affairs Council Meetings    
EUR 09:00 EU: M3 Money Supply 4.2% 4.1%
CAD 13:30 Canada: Raw Materials Price Index -0.3% 0.6%
USD 13:30 US: Personal Spending 0.2% 0.4%
USD 13:30 US: Core Personal Consumption Expenditures Price Index 0.2% 0.2%
USD 15:00 US: Pending Home Sales 3.1% 0.6%

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