Pound Falls on Inflation Report Hearing
Markets remain calm on a lack of high impact news. There was some action in the AUD overnight, as the previous day’s rally was retraced on light news flow. The Pound also fell 40 pips during last night’s Inflation Report Hearings – the Bank of England was accused of giving mixed messages in regards to its interest rate guidance, and the market reacted negatively to the discussion to bring the Pound down to 1.6965 in late trading yesterday.
The remaining week is dominated by US data out tonight and tomorrow. The release of the final estimate for Q1 GDP is expected to show that the US economy contracted by 1.8% from the previous quarter. The final GDP figure is not normally as volatile as the advanced figure, however a large deviation from expectations and the simultaneous publication of Core Durable Goods Orders has the potential to move USD pairs. Also of note to USD pairs will be Unemployment claims, out Thursday, however little change is expected from the previous month.
Outside of US data, traders will be watching BoE Governor Mark Carney’s speech on Thursday for clarification on some mixed forward guidance, with the potential to create volatility in GBP pairs. German Preliminary CPI is out on Friday – ahead of the Euro Area Flash estimate on Monday – and both will be important for expectations heading in to a fairly high impact ECB meeting next Thursday.
Source: Forex Market Review – Pound Falls on Inflation Report Hearing