Sterling has managed to hold onto most of yesterday’s gains against the dollar and euro in early trading. The pound benefited yesterday afternoon from improved market sentiment as equity markets regained some of their poise after Monday’s falls. Earlier, sterling had been pressurised when data released showed growth among UK businesses slowing sharply in May. The composite S&P Global/CIPS Purchasing Managers Index, spanning the services and manufacturing industries, slumped to 53.1 last month from 58.2 in April, the lowest since February 2021 as the economy felt the hit from accelerating inflation. The PMI Index for the construction industry is released this morning.


The euro has remained trading within its recent tight range against the dollar, finding support when approaching this month’s recent low. The single currency will look to gain some traction from the release of revised Gross Domestic Product (GDP) data for the first quarter this morning. GDP is a measure of all goods and services produced and is considered a broad measure of health and activity of the economy. The consensus opinion is the data will show the bloc’s economy expanding by 0.3% in the January to March period.


Market sentiment continued to be the main driver for the dollar yesterday. The greenback lost demand when strong gains registered by Wall Street’s main indexes and falling US treasury yields combined to undermine the safe haven dollar. There was little market reaction to comments by US Treasury Secretary Janet Yellen, while testifying before the 2023 budget Senate Finance Committee, that the US economy faces challenges from “unacceptable levels of inflation” and an appropriate budget is needed to complement the Fed’s actions without harming the labour market. There are no major data releases for the US today.

Economic Calendar

11.00 EUR GDP (QoQ)(Q1)