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Surge in GDP fails to inspire pound as markets smell a rat

currency-newsSurge in GDP fails to inspire pound as markets smell a rat
The pound was stuck in a narrow range on Friday, with the UK currency unable to find support despite a solid headline GDP print.

Sterling remains steady at the start of this week, with GBP/EUR stable at €1.1575, GBP/USD flat at $1.3003 and GBP/CAD subdued at C$1.7468, while GBP/AUD and GBP/NZD both accelerate, climbing to AU$1.8650 and NZ$1.9761 respectively.

Coming up this week, there will be a chance for the pound to redeem itself if the UK’s latest employment figures show the recent uptrend in wage growth carried through into March.

What’s been happening?

The pound remained mostly muted at the end of last week’s session as markets largely shrugged off the UK’s GDP data.

The Office for National Statistics reported that domestic growth surged higher in the first quarter, climbing from 0.2% to 0.5% as businesses stockpiled goods ahead of Brexit.

However undermining the release and limiting the appeal of Sterling were warnings that this bump in growth is unlikely to persist into the second quarter as businesses seek to sell-off their Brexit stockpiles.

Meanwhile, the GBP/EUR exchange rate remained relatively stable through to the end of last week as EUR investors remained cautious of the potential ramifications a US-China trade war could have on the Eurozone.

However, the GBP/USD exchange rate was able to drift higher on Friday, with the US dollar finding little support from the escalation of US-China trade tensions and instead finding itself under pressure as the latest US CPI figures missed expectations.

What’s coming up?

Looking to the week ahead, we could see the pound mount a recovery following the publication of the UK’s latest employment figures.

This will mostly be centred on the UK’s latest earnings figures, with Sterling potentially accelerating if the recent uptrend in domestic wage growth persists into March.

Meanwhile, EUR investors will be focused on the publication of Germany’s GDP figures in the mid-week, with the euro likely to find support if the Eurozone’s largest economy is shown to have returned to growth in the first quarter.

Finally, we have the US dollar, which is likely to see its movement tied closely to any developments in the US-China trade dispute, with a further rise in tensions possibly pushing some investors towards the safe-haven currency.
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