Newsletter – 24th May 2017

Morning Bulletin

Yesterday

  • Sterling recovered from its lowest value against the euro since March yesterday gaining a fifth of a percent over the course of the day.
  • GBP/EUR opened the day at 1.1564 and fell to 1.1522 before recovering to close at 1.1587.
  • This is an impressive performance from sterling as it has been soft against the euro for the past fortnight and the tragic terrorist attack in Manchester will have been expected to weaken the British currency. That being said, financial markets have become less reactive to one-off terrorist incidents in recent years (PoundSterlingLive). 
  • GBP/USD weakened yesterday dropping back below 1.30 after briefly touching 1.3033 earlier in the day. Cable closed at 1.2961.
  • Broader US dollar strength was illustrated in the dollar index as it rallied by 0.4 percentage points.
  • In terms of data we saw German flash manufacturing PMI come in stronger than expected at 59.4 vs 58, German Ifo business climate data come in at 114.6 vs 113.1 expected and public sector net borrowing from the UK come in higher than expected at 9.6B vs 8.0B.
  • The UK election campaigns were halted until further notice yesterday in light of the events in Manchester. PM May chaired a COBRA meeting yesterday morning to assess and stated in a later speech that ‘the spirit of Manchester is far mightier than the sick plots of depraved terrorists’.
  • The terror threat level has been raised to ‘critical’ which means that further attacks could be imminent. As a result of this elevation of the official threat level, military personnel will be working with the Police to guard landmarks such as Buckingham Palace, Downing Street and Westminster.
Overnight
  • Australian construction work done q/q came in weaker than expected overnight at -0.7% vs -0.5%.
  • The Aussie dollar is trading at 0.7467 against the USD whereas GBP/AUD is trading at 1.7376.
  • GBP/NZD is trading at its lowest levels since April as a result of the recent weakness in sterling. GBP/NZD interbank is 1.8488 at the time of writing.
Today
  • Sterling has gained a little ground on the euro this morning pushing up to 1.1595 and it a similar story for the pound against the dollar with a small gain of 25 points resulting in a current GBP/USD interbank rate of 1.2978.
  • We can look forward to ECB President Mario Draghi speaking in Madrid at 1.45pm before the Bank of Canada announce the overnight rate and release the accompanying rate statement at 3pm. Existing home sales from the US is also released at 3pm.
  • This evening the FOMC meeting minutes will released at 7pm and FOMC member Kaplan will speaking at 11pm.
  • UK PM May will be chairing a second COBRA meeting this morning following the changing of the threat level.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1599 +0.10
GBP/USD 1.2977 +0.13
EUR/USD 1.1189 +0.07
AUD/USD 0.7467 -0.11

 

Time (GMT) Region Data Release Forecast Previous
13:45 EUR ECB Draghi Speech
15:00 CAD BOC Rate Statement
15:00 CAD BOC Overnight Rate 0.50% 0.50%
15:00 USD Existing Home Sales 5.65M 5.71M
19:00 USD FOMC Meeting Minutes
23:00 USD FOMC Kaplan Speech