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The pound's the winner from yesterday's trading

GBP - British Pound

It was a cracking day at the office for the Pound yesterday. Gains were seen across the board on what was a very light UK calendar. Sterling moves were feeding off news that cross-party Brexit talks were progressing well with Labour minister, Sue Hayman, saying there had been 'really constructive discussions' with the government. Adding that there have been 'substantive moves' in Brexit talks with Labour.

Cable broke through 1.30 during the day, gaining close to 1%. GBP/EUR broke through a 3-week high, peaking at 1.1635. These moves could be more of a case of broad weakness by the dollar and Euro, rather than newfound strength in the pound. British numbers have been lukewarm, and Brexit will continue to weigh on the pound, even with the extension until October. Consumers remain pessimistic about the economic outlook and uncertainty over Brexit, and this gloomy mood has also affected consumer spending.

On the release front yesterday, British GfK Consumer Confidence remained pegged at 13 points for a third straight month. 9.30 this morning sees the 1st round of PMI’s, this coming from the Manufacturing sector. A drop from 55.1 from the previous month to 53.2 has been forecast, still within expansion territory. Don’t be surprised of an overshoot in this number as ‘Brexit Stockpiling’ could be a driver.

Key Movers

Data from the Eurozone on paper looked relatively impressive. The preliminary Eurozone GDP rose to an annual higher-than-forecast 1.2% during the first quarter of 2019. Quarter-on-quarter, GDP jumped by a better than expected 0.4%, rebounding strongly following a slump in the second half of 2018. further data from Eurostat revealed that the bloc’s unemployment rate dipped to 7.7%. This was the lowest level of unemployment in the Eurozone since September 2008. Surprisingly sterling still came out the winner following the raft of releases. However, investors were finally given fresh and more solid signs of Eurozone resilience in the Eurozone growth data, so we may well see a delayed reaction at some point or if Brexit news turns sour.

In the U.S., the Employment Cost Index remained steady at 0.7%, matching the estimate. Chicago PMI dropped sharply to 52.6, down from 58.7 points in the previous release. This missed the forecast of 59.1 points. CB Consumer Confidence improved to 129.2, above the estimate of 126.2 points. Tonight, we get the roundup of the FEDS latest rate statement, where no change is expected.

In other fundamentals yesterday, Canadian GDP m/m contracted 0.1%, this following its 0.3% growth in January.

New Zealand’s unemployment rate declined to 4.2%, down from 4.3% in the final three months of 2018 and a result that was in-line with market expectations. This drop-in unemployment will add further expectation on the RBNZ to deliver a 25-basis point cut to the cash rate next week.

Expected Ranges

GBP/USD: 1.2950 - 1.3100 ▲

GBP/EUR: 1.1550 - 1.1650 ▲

GBP/AUD: 1.8380 - 1.8580 ▲

GBP/NZD: 1.9530 - 1.9730 ▲

GBP/CAD: 1.7380 - 1.7530 ▲