The pound fell back again yesterday, with renewed Brexit uncertainty forcing the currency to relinquish some of the gains it made on Tuesday.
Trade in Sterling is mixed this morning, with GBP/EUR muted at €1.1379 and GBP/NZD holding steady at NZ$1.9072, while GBP/USD advances to $1.3448 as well as GBP/AUD and GBP/CAD climbing to AU$1.7578 and C$1.7420 respectively.
Looking ahead the Eurozone will publish its latest GDP estimate this morning, with the euro likely to slide if the bloc is confirmed to have slowed in the first quarter.
What’s been happening?
The pound retreat against the majority of its peers on Wednesday as a more upbeat economic outlook for the UK failed to offset renewed fears surrounding Brexit.
Sterling sentiment tumbled on Wednesday amid fresh concerns the UK government is unprepared when it comes to providing clarity on how it plans to separate from the EU.
This comes as the government is still to publish its Brexit white paper, with time running out before Theresa May will need to present it at an EU summit later this month. Observers fear this may prevent a breakthrough being found during the summit.
Accelerating the losses in the GBP/EUR exchange rate were comments from European Central Bank (ECB) chief economist, Peter Praet, in which he hinted the bank could soon begin to wind down its quantitative easing programme.
In a speech in Berlin Praet indicated the ECB will debate whether to call time on its bond-purchases when policymakers meet next week, spurring the euro higher as the bank takes the potential first step in reining in its ultra-loose monetary policy.
Meanwhile the GBP/USD exchange rate ticked higher yesterday as the US dollar continued to take a breather from its recent rally, with some analysts suggesting the currency may have peaked in late May.
This lull in USD came despite the US trade deficit being revealed to have narrowed faster than expected in April, when it fell from $47.2bn to $46.2bn.
What's coming up?
Looking ahead, while there is a lull in UK economic data, a speech by the Bank of England’s (BoE) Dave Ramsden may impact the pound later this afternoon.
This could see Sterling trend lower if Ramsden appears dovish on the prospect of the bank still raising interest rates this year.
Meanwhile the euro may struggle to advance during today’s session with the publication of the Eurozone’s latest GDP estimate, which is expected to confirm the slowdown in growth in the first quarter of 2018.
Finally it’s set to be a quiet second half of the week in terms of US data, potentially leaving USD a little directionless in the absence of any major political developments in the US.
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