The UK’s recent run of impressive economic data took a knock yesterday as GDP numbers came in lower than expected, registering a 0.3% increase as oppose to 0.4% expected. Late last night we also saw UK consumer confidence come in worse than expected to send sterling lower. The pound’s position against the euro of late has seemed pretty impressive, holding above the 1.40 handle for a few days, but we have now seen a slide in the currency pair in favour of the single currency. As we edge ever closer to next weeks key date of June 5th, when a deal has to be struck between Greece and its creditors, rumours are bound to send the currency pair one way or another. The last few days have seen reports that a deal will be struck, but even this morning other reports that no deal is near shows that no one really knows what the outcome will be. A forward buying rate may be an option for you if you like current exchange rates, but don’t have the total amount of funds available to book.
The euro continues to somehow make gains in currency markets as reports over the last few days that a deal on Greece can be done before next Friday have seen the single currency claw back gains over both the pound and dollar. Against the buck, nearly a cent improvement has seen EUR/USD trade back over the $1.09 handle, and in EUR/GBP we have seen the 1.40 handle broken. Whether you think a deal on Greeces bailout will be reached changes by the minute, depending on which report you have just read. Only this morning, Greece’s creditors said a deal to unlock rescue aid isn’t imminent as they demanded the debt-ravaged nation make stronger commitments to overhaul its economy. The Greek government saw its optimism over an agreement rebuffed as European officials gathered in Dresden for the G7 meeting said much more effort is needed. Greece had claimed a solution could be reached by Sunday. There is a “substantial way to go,” European economic commissioner Pierre Moscovici said in a Bloomberg television interview on Friday. “I wouldn’t give a day for a deadline. There have been some deadlines in the past, and there we are today. But it’s clear that we need to speed up, that time is running short.” With time and patience running out, Greece hasn’t yet said how it will pay almost 1.6 billion euros ($1.74 billion) in International Monetary Fund payments scheduled for next month, with the first transfer due June 5.
The dollar remains the currency of choice for investors but was drifting lower against the yen in Asia trade Friday, with some investors locking in profits ahead of the weekend following this week’s high-profile rally. The greenback ratcheted down from its earlier levels, finding support around ¥123.60, but the level was still much higher than the ¥121.50 mark it was hovering around at the start of the week. At one point in the rally, the dollar touched ¥124.46, its highest since Dec. 5, 2002. But looking ahead, it will be US GDP numbers that markets will focus on for today. Be it the result of port strikes, weather or some weird seasonal factor, expectations are U.S. growth contracted in the first quarter and just how much could be an important factor in markets today. Economists expect a 1% decline in first-quarter GDP, after an original print showed a 0.2% gain. That was down from 2.2% growth in the fourth quarter. With the Fed’s promise to decide on interest rate hikes based on economic data, even backward-looking data has become a big deal. The dollar this week has edged ahead, especially against the yen, on expectations of central bank rate increases this year, and each piece of positive data has given it a nudge. If GDP comes in decent, it’s going to give it another push.