Pound struggling ahead of today’s ECB rate decision and GDP figures

The pound remained subdued during yesterday’s trading session, with both GBP/EUR and GBP/USD failing to strengthen as markets remained wary in advance of the UK’s latest GDP figures.

Sterling is trading narrowly against most of its peers this morning as well, with GBP/EUR muted at €1.1452 and GBP/USD flat at $1.3935. While GBP/AUD and GBP/CAD are both holding steady at AU$1.8318 and C$1.7927 respectively. Only GBP/NZD is showing any gains this morning with a rise to NZ$1.9742.

The European Central Bank (ECB) will conclude its April policy meeting later today, with the euro expected to slump if the bank strikes a more cautious tone this month…

What’s been happening?

The pound struggled during Wednesday’s trading session as a lack of domestic data led markets to focus on the UK’s upcoming GDP figures.

Economists predict that a run of soft UK data at the start of 2018 will see UK economic growth slow from 0.4% to around 0.3% in the first quarter.

These forecasts proved to place significant pressure on Sterling yesterday, especially as some investors fear that a slowdown in GDP is unlikely to bolster the case for a rate hike from the Bank of England (BoE) next month.  

Movement in the GBP/EUR exchange rate was also supressed yesterday in the run up to the ECB’s rate decision later this afternoon.

Analysts are not expecting Mario Draghi to drop any major bombshells regarding monetary policy today. Instead they suspect the ECB President will advocate for a weaker euro, warning that the single currency’s strength is hampering efforts to bolster inflation.

Meanwhile the GBP/USD exchange rate traded close to a one-month low on Wednesday, with investors flocking to the US dollar as US treasury yields held above 3%.

What’s coming up?

The pound may be able to shake off some of its recent weakness this morning with the publication of the Confederation of British Industry’s (CBI) latest retail survey.

Retailers are expected to report that activity rebounded in April as consumers were encouraged to venture back out into the high street as the weather began to improve.

The US dollar meanwhile may relinquish some of its recent gains with the release of the latest US durable goods order figures, with analysts predicting that order growth will have slowed in March.

The spotlight today, however, will undoubtedly be on the outcome of the ECB’s latest policy meeting, with the euro expected to be met with losses as economists expect the bank will be more cautious in its economic outlook after removing its easing bias from its March policy statement.