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US dollar weakens despite surge in GDP growth

currency-newsUS dollar weakens despite surge in GDP growth
The pound was left muted at the end of last week against all the majors except the US dollar, which stumbled in the wake of the US GDP release.

Sterling remains steady this morning, with GBP/EUR muted at €1.1595, GBP/USD flat at $1.2940 and GBP/CAD stable at C$1.7421, while GBP/AUD and GBP/NZD hold steady at AU$1.8342 and NZ$1.9396 respectively.

In the spotlight today will be the US PCE price index, with the US dollar potentially rallying if US inflation accelerated in March as expected.

What’s been happening?

The pound remained rangebound against the majority of its peers on Friday, as a cloud of Brexit uncertainty continued to hang over the UK currency.

This resulted in GBP investors largely ignoring the UK’s latest mortgage figures in spite of approvals soaring to a nine-month high in March.

However one Sterling pairing that was able to strengthen at the end of last week was GBP/USD as the US published its latest GDP figures.

While US growth was reported to have sailed past expectations, climbing from 2.2% to 3.2% in the first quarter, the US dollar weakened on Friday as analysts suggested the headline figures masked some underlying weakness in the US economy.

Meanwhile, the GBP/EUR exchange rate was left rangebound on Friday, with investors reluctant to alter their positions in the euro ahead of the Spanish elections held over the weekend.

What’s coming up?

Looking ahead, the US dollar may look to rebound at the start of this week’s session with the release of the latest US PCE price index.

Economists forecast the data willreveal that US inflation strengthened last week, potentially helping offset some of the concerns regarding the US GDP print.

Meanwhile, the euro could come under pressure later this morning as the Eurozone publishes its business confidence index, with analysts predicting that signs of slowing growth will have led to businesses growing increasingly pessimistic in April.

Finally, in the absence of any major data, movement in the pound is likely to remain limited at the start of the week, especially if Brexit concerns continue to dampen the outlook for investors.
Philip McHugh

Philip McHugh

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)

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