GBP/USD regained some of its losses yesterday, pushing above the 1.4185 mark throughout the afternoon. Cable hit 1.42 on Tuesday for the first time since 24th February, but struggled to tread water for any extended period of time. Looking back over the past 12 months the pairing has gained nearly 15% but struggled to push through and above the 1.42 barrier, which bears the question if cable might have found its roof for now.
In the US, Wednesday’s Fed minutes came with a few surprises for the markets, with a hint that central bank officials might consider slowing down bond-buying efforts. This caused the S+P 500 and Dow Jones to drop off over the course of the day, with a knock-on effect on USD strength. Traders will wait with anticipation for any further sentiment on bond-buying stances in the next FOMC minutes.
According to the latest CBI Industrial Trends Survey, the UK industry has experienced its fastest growth in May since the end of 2018 as chemicals producers, electronic engineering firms, and metal factories reported their strongest growth, with “output up in 12 of 17 sub-sectors.” It is expected that concerns around supply issues has led to over-ordering, inevitably leading to an increase in demand and orders. It is expected that order volumes will continue to increase over the next three months.
On the economic calendar today, UK retail sales data will be released in the morning. A positive consumer spending figure, coupled with April’s 1.6% inflation reading would likely provide further support for the pound. Later in the afternoon, UK PMI data will be released which could give support to the CBI Industrial Trends Survey and give a further boost to GBP.
Have a great day.
James Camp, Relationship Manager.
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