On 13 June, the UK government revealed legislation that would allow it to scrap parts of the Northern Ireland protocol.
- Weaker manufacturing PMI could dent pound optimism
- Canadian dollar looks for support after underwhelming GDP
- US dollar braces for Federal Reserve policy announcement
Hopes of Brexit progress shore up pound
Speculation over potential progress towards a Brexit compromise between the Labour and Conservative leaderships saw the pound pushing sharply higher across the board yesterday.
However, GBP exchange rates still look vulnerable ahead of this morning’s UK manufacturing PMI and consumer credit data.
If the manufacturing sector shows signs of slowing in April this could weigh on the pound, given that the sector was almost the sole driver of economic growth in March.
Unless manufacturing sector activity accelerates on the month GBP exchange rates could struggle to hold onto their bullishness.
Signs of weakening growth drag on Canadian dollar
February’s Canadian gross domestic product data fell short of forecast, unexpectedly delivering a contraction on the month and undermining confidence in the economic outlook.
Further losses could be in store for the Canadian dollar this afternoon if the latest manufacturing PMI also proves disappointing.
However, forecasts point towards the PMI strengthening from 50.5 to 51.5 in April, signalling modest growth on the month.
Evidence of greater resilience within the Canadian economy could help CAD exchange rates to recover some of their lost ground today.
US dollar vulnerable ahead of Federal Reserve meeting
The mood towards the US dollar has remained muted this week, with the world’s largest economy continuing to demonstrate signs of losing its momentum.
This evening’s Federal Open Market Committee (FOMC) policy announcement could put additional pressure on USD exchange rates, with investors wary of any increased dovishness.
If the Fed maintains a neutral policy outlook, keeping the prospect of an interest rate hike off the table for the foreseeable future, this could see the US dollar slump.
On the other hand, greater signs of confidence among policymakers may give USD exchange rates a degree of support.
Wednesday, 1st May 2019
09:30 GBP Manufacturing PMI
14:30 CAD Manufacturing PMI
19:00 USD Federal Open Market Committee Rate Decision
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)