Daily Currency report

From Peter-John Theuninck, Currency Analyst at Baydonhill FX.

The Dollar remains supported as expectations of a slowdown in QE prompts investors to buy the US currency.

• There is no economic data scheduled today but investors will focus on the BoE MPC minutes being released on Wednesday.

• The second release of UK Q1 GDP data on Thursday is forecast to remain at 0.3% and could offer support for the Pound.

• Focus on German and French PMI data will be crucial for the Euro as the ECB is expected to easing policy further.

• Expectations of a slowdown in stimulus by the Fed will likely continue to support the Dollar.

A lack of economic data saw the Pound trading along wider market movements on Friday and today will be no different. The Bank of England publishes the minutes from its last monetary policy meeting on Wednesday and analysts are not expecting any real surprises.

UK government spending figures and the second release of Q1 GDP growth data on Wednesday and Thursday respectively will also be significant for keeping the Pound supported.

UK government debt is forecast to have eased in April while the growth rate of 0.3% for the first quarter of this year is expected to remain unchanged.

The only negative aspect for Sterling to be weary of its the fact that traders are still uncertain over what policy changes might be exacted by the Bank of England in July, when the new BoE Governor Mark Carney takes the reigns at the UK central bank.

Italian industrial orders data will be released this morning and is unlikely to offer much support for the single currency as expectations of more monetary easing by the ECB continues to put pressure on the Euro.

German and French PMI data will be released later this week and if the Euro has any hope of a strong recovery, robust data figures will be needed. Until then investors will remain cautious towards the EU currency.

Fed officials on Friday hinted at a slowdown in its bond buying operations over the short-term which boost Dollar demand and is keeping the greenback trading higher this morning. Officials sited improvements in overall economic conditions in the United States as a reason for their change in policy outlook. The US Federal Reserve Bank meets to discuss monetary policy next week.

There is no data scheduled to be release for the US today and this week will see only a few housing numbers and of course the weekly jobless claims numbers being published.