On 13 June, the UK government revealed legislation that would allow it to scrap parts of the Northern Ireland protocol.
- Pound vulnerable to stagnant UK gross domestic product
- Dovish ECB commentary to put pressure on euro
- Consumer price index uptick may boost US dollar
UK growth slowdown to exacerbate pound softness
Brexit speculation looks set to remain the primary influence on GBP exchange rates in the near future, with markets still lacking clarity over the shape of the UK’s future relationship with the EU.
Even so, the mood towards the pound could still sour further this morning on the back of February’s monthly gross domestic product reading.
Forecasts point towards growth stagnating on the month, potentially leaving the pound exposed to a fresh bout of selling pressure.
If the UK economy loses further momentum in the face of Brexit-based uncertainty GBP exchange rates are likely to extend their recent downtrend.
Signs of ECB dovishness could add to euro weakness
Demand for the euro could weaken once again this afternoon in the wake of the European Central Bank’s (ECB) latest policy announcement.
While no change in monetary policy is anticipated at this juncture the appeal of the single currency could still diminish in response to any fresh signs of policymaker dovishness.
As long as the ECB looks set to leave interest rates at their current record lows for longer the strength of EUR exchange rates is likely to remain muted.
However, if ECB President Mario Draghi shows any signs of optimism over the economic outlook this could offer the euro a boost.
US dollar looks for rally on consumer price index data
As US data has proved largely disappointing in recent days the strength of the US dollar has diminished, with investors seeing limited cause for confidence.
USD exchange rates could find a rallying point this afternoon, however, as forecasts point towards the US consumer price index strengthening on the year.
Signs of stronger inflationary pressure may offer the US dollar a boost, even though the CPI is not the Federal Reserve’s preferred measure of inflation.
Another underwhelming result, on the other hand, may see USD exchange rates coming under greater pressure.
Wednesday, 10th April 2019
09:30 GBP Gross Domestic Product
12:45 EUR European Central Bank Rate Decision
13:30 USD Consumer Price Index