The Pound has begun Wednesday morning on the back foot against the US Dollar (GBP/USD) while remaining in a tight range against both the Euro (GBP/EUR) and Japanese Yen (GBP/JPY) exchange rates.
Japenese Activity Rebounds, will GDP Follow?
In Japan, the latest All Industry Activity Index came in just below forecasts at +0.4%. Despite not quite reaching the +0.5% expected in February, the reading was far more favourable than the -1.1% contraction seen in January. The index is sometimes regarded as a way of measuring gross domestic product (GDP) as it considers all areas of the economy and tends to mirror growth trends. Therefore, it’s worth noting that although there was an upswing in the monthly figure, the annual reading came in at +1.1% in February, a disappointment considering the January number resided at +1.8%.
ECB Monetary Policy Meeting and US Durable Goods Ahead
Investors in the US Dollar will be interested to see the latest MBA Mortgage Applications figure and the US Crude Oil Inventories number due out later in Wednesday’s session. In Tuesday’s trading, the US Consumer Confidence Index enjoyed a spring upswing, with the April figure coming in at 128.7.
Thursday has the potential to be an action-packed day in the market when the European Central Bank (ECB) announces its latest monetary policy decision with a followup press conference from ECB Chief Mario Draghi. Comments from Draghi on the path of monetary policy could create some EUR exchange rate movement. Additionally, the US Advance Goods Trade Balance and Durable Goods Orders stats will be out.
Brexit Continues – Will the UK Stay in the Customs Union?
Meanwhile, in the UK, Brexit discussions are ongoing and with 338 days to go, things are heating up ahead of the June summit. The EU is reportedly offering the UK a say in trade policy if it remains within the customs union. There’s been a lot of debate on whether the UK should remain within the customs union, and this latest move is an attempt by the EU to sweeten the deal. The downside to this is that the UK would be allowing the EU to mould trade deals with other countries, and the EU is unlikely to be concerned with benefitting Britain.
However, giving the UK more power in trade policies would help to relax concerns that the UK wouldn’t have a seat at the table when it comes to fresh deals.
Friday will be a big day for the Pound when Bank of England (BoE) Governor Mark Carney speaks, and the latest Gross Domestic Product (GDP) figures are released.
The Pound to Japanese Yen (GBP/JPY) exchange rate is trending at 152.226.
The Pound to US Dollar (GBP/USD) exchange rate is trading at levels of 1.3954.
The Pound to Euro (GBP/EUR) exchange rate is at 1.1433.