GBP/EUR 1.2310 (0.8123)
As we highlighted yesterday, this week’s data calendar is very much US dominated with little or nothing of note scheduled for release from many of the other major economies. First up of note yesterday was April’s Durable Goods data which unexpectedly rose. The US Commerce Department’s figures showed bookings for goods with a shelf life of at least three years rose 0.8 percent in April after a 3.6 percent gain in the prior month. The median of analysts’ forecasts called for a 0.7 percent drop. Whilst it was a busy day with a whole host of data releases we’ll just focus next on the Consumer Confidence reading due to the importance of domestic consumption to the economy there. Again another very positive US showing with confidence among U.S. consumers rising in May to the second-highest level since 2008 as American’s grew more upbeat about the economy and labor market.
Overall the reaction has been received as very much Dollar positive with the greenback posting gains across the board. EURUSD interestingly is getting close to the key 1.36 mark (with an overnight low 1.3621) which if breached may open the next two key support levels of 1.3560 and 1.35 itself. Against the pound, failure to break the 1.70 mark in recent weeks coupled with the improving economic outlook for the US has seen GBPUSD falling to a recent low of 1.6761. US events are taking a breather today but we have another action packed schedule for Thursday and Friday with tomorrow’s GDP reading being the highlight.
On the single currency front, German Unemployment report is today’s highlight but with all eyes focused on next week’s ECB meeting we don’t expect to see much movement until then. Despite speaking three times at the ECB Forum over the past few days in Portugal, Mario Draghi gave little clues away as to what is in store next week and beyond. Amid all the speculation as to what exactly will take place, the euro is heading to its biggest monthly fall in four months. With little events of note for the rest of the week, EURGBP is likely to remain on the sidelines with few trying to push the pair beyond the recent .8081 low. Already this morning a bit of profit taking has kicked in with the pair trading back towards .8140.