The British pound/U.S. dollar currency pair was the obvious choice for traders today ahead of growth figures from both sides of the pond. The cable started the day firm even though economists' expectations were downbeat about the UK growth prospects. Indeed, GDP actually came out weaker than expected at +0.3% quarter-over-quarter and 2.1% year-over-year. Growth was held back by the dominant services sector where output rose just 0.3%, the weakest performance since Q1 2015.
The euro and equity markets have had a strong week so far, thanks mainly to a market-friendly outcome of the French first round presidential election at the weekend. The news caused the single currency to gap higher across the board and although gaps typically get filled quickly this hasn't been the case for the major euro crosses thus far, although the euro/British pound currency pair is taking another bite out of its gap as I write.
The Aussie/U.S. dollar (AUD/USD) currency pair has finally cracked a key support area today and at the time of this writing, the pair was still trading near the day’s low, suggesting strong selling pressure.
The dollar has been trending lower ever since the turn of the year. This has been because of the unwinding of the bullish positions that had been accumulated before and after the U.S. election in part as investors began to question how much of the promised fiscal spending President Trump will actually deliver and how this may impact growth and inflation, and in turn interest rates.
Clearly, Brexit-related uncertainty will remain in place for a while yet. After all, we still don’t know, for example, what type of a trade deal the UK will get from the EU. Thus, it can be argued that last Tuesday’s upsurge in the pound may have been a bit of an overreaction.
Relief. That is the word that basically describes the sharp moves in the markets today. The euro and stock markets have absolutely surged higher on the back of news Emmanuel Macron secured almost 24% of Sunday’s first-round vote, suggesting he will probably beat Marine Le Pen in a run-off for the French presidency.