US Dollar Slides Ahead Of Key US GDP Data

Pound US Dollar exchange rate stumbles

GBP

The GBP/USD edged lower early hours today as the latest US durable goods orders beat forecasts. The Pound was mixed yesterday as the Confederation of British Industry’s (CBI) latest data indicated improving optimism and declining orders in the UK. According to the CBI’s monthly survey, industrial trends orders dropped by 5 points in April, unexpectedly falling to -23, rather than edging higher to -16, from March’s reading of -18. Despite rising price pressures, manufacturers anticipate that output will begin to rise over the next three months, offering the strongest expectations since October last year. Meanwhile, the CBI’s business confidence survey rose more than expected April, hitting a six-month high with a reading of 9. The survey surpassed market forecasts of 2 and strengthened notably from last month’s negative reading of -3. A lack of notable releases throughout todays session may see Sterling left vulnerable to market volatility. An upbeat market sentiment will likely lift the increasingly risk-sensitive Pound against its safe-haven rivals, while gloomy trading conditions could see USD take precedent.

No Major Data

EUR/GBP flat as EU And UK PMIs both improve

EUR

The EU's economic downturn may be reversing, helping the Euro strengthen to €1.1659 against the Pound Sterling and above $1.0700 against the US Dollar. Recent months have brought better data for the EU. The economy appears to have bottomed out and should be returning to growth. This should limit the amount of cuts likely to be made from the ECB and help stabilize the Euro. This week’s data encouraged the view that data in the EU has bottomed out and is turning higher again. Leading data such as the PMIs on Tuesday brought some positives, as did Wednesday’s IFO business climate survey in Germany. As a result, the Euro has been edging higher and has regained €1.1659 against the Pound, while EUR/USD trade back above $1.0700 yesterday. This will be welcome news for the ECB who may have been concerned by the data out of Germany late last year. It may have even contributed to the decision to cut rates as early as June, although the ECB have remained quiet on this matter and have insisted only inflation data and wage growth really influenced policy. As things stand, a cut is still very likely in June so the Euro may not fly higher, but with the economy slowly recovering, the downside looks limited. Several European Central Bank (ECB) policymakers will be delivering speeches throughout the day.

Major Data:

ECB's Schnabel speech

Economic Bulletin

16:15, German Buba President Nagel speech

Pound US Dollar exchange rate stumbles

USD

The USD stays under modest selling pressure on Thursday as investors gear up for key data releases. The US Bureau of Economic analysis will publish the first estimate of the annualized Gross Domestic Product (GDP) growth for the first quarter and the Department of Labour will release the weekly Initial Jobless Claims data. Following Tuesday's sharp decline, the USD Index registered small losses on Wednesday, supported by the upbeat Durable Goods Orders data for March. Additionally, the cautious market stance further helped the currency stay resilient against its risk-sensitive rivals. Early today, the USD Index stays in negative territory and edges lower toward 105.50. The US economy is forecast to grow at an annual rate of 2.5% in Q1, following the 3.4% expansion recorded in the last quarter of 2023. Meanwhile, US stock index futures stretch lower in the European morning and the 10-year US yield continues to fluctuate above 4.6%. EUR/USD gained traction and climbed to its highest level in nearly two weeks above $1.0720 after closing virtually unchanged on Monday.

Major Data:

13:30, Gross Domestic Product Annualized(Q1): Exp 2.5%

13:30, Initial Jobless Claims: Exp 21.4k