British Pound, US Dollar May Brush Off Economic Data Flow
- British Pound unlikely to suffer if service-sector PMI shows weakness
- Soft pre-election UK data may be helpful by dulling “Brexit” acrimony
- Confident FOMC policy statement may have neutralized US news-flow
UK PMI data headlines the economic calendar in European trading hours. The catch-all composite index is expected to show that cross-sector activity growth slowed a bit in April. Purchasing managers’ surveys tracking manufacturing and construction outperformed earlier this week, so if there is to be a downturn as expected, it will come from services.
The British Pound seems unlikely to significantly suffer is this proves to be the case. The BOE is set to remain on hold through the end of next year. That may see traders overlook policy bets, reading soft data as helpful in moderating the tone of Brexit rhetoric ahead of June’s election. That wouldn’t be bad news for confidence in GBP-priced assets. Another upbeat surprise might be unambiguously supportive.
Later in the day, US economic data returns to the spotlight. The latest batch of statistics on trade, factory and durable goods orders as well as jobless claims are all due to cross the wires. Their US Dollar impact may be limited however after the FOMC brushed off sluggish first-quarter growth as “transitory”, signaling its rate hike program is on track. Investors may also opt to wait for Friday’s jobs report before committing.
What will shape US Dollar trends through mid-year? See our forecast to find out!
** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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