IFX Market Report: Thursday 13th May 2021

UK GDP figures came out better than expected yesterday, helping the Pound maintain its resilience against its G10 peers in the Wednesday session. While the British economy contracted by 1.5% in Q1 of 2021, this figure is much better than the 1.7% estimated. Sterling bulls are hopeful that with lockdown measures now being phased out and the economy reopening, the nation can expect to see a sharp rebound for the remainder of the year. GDP for March grew to 2.1%, “slightly exceeding expectations, and the level of GDP now sits 8.7% below its pre-pandemic level at the end of 2019, according to the Office for National Statistics. On a year-on-year basis, GDP shrank by 6.1%” in Q1 . In spite of these readings, the International Monetary Fund (IMF) has predicted that UK GDP will “grow 5.3% in 2021, partially recovering from last year when the economy saw its largest annual contraction since the Great Frost of 1709”.

Despite yesterday’s impressive GDP figures, Cable was unable to sustain itself above the 1.41 level by the London close. GBPUSD opened the day at 1.4122 and closed at 1.4098.

GBPEUR is contrast made gains in the Wednesday session. The pair opened at 1.1648 and closed at 1.1672. Some economists believe we could see the rate exceed 1.17 very soon.

EURUSD, similarly to Cable, made a loss on Wednesday; opening at 1.2123 and falling into the 1.20’s, where it eventually closed at 1.2075.

On the data front, the Bank of England’s (BoE) Cunliffe will be speaking at 13:00, closely followed by the weekly US Labour Report, released at 13:30. Continuing Jobless Claims are expected at 3655K, Initial Jobless Claims are forecasted at 490K, and Jobless Claims 4-week Average has a previous of 560K. At 17:00 BoE Governor Andrew Bailey will be speaking, then from across the pond we also have speeches from Fed members Waller and Bullard.

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