support@instantforexsupport.com

Forex Broker News

avtar

GDP Revision: Surprise and Concern.

Consumer stumble brings economic concern.

 

Official data for consumer activity in the U.K., such as retail sales and consumer confidence had been showing reasonable resilience recently holding back the effect of a weak currency and higher inflation.

 

It now seems that alone, the consumer is unable to stem the tide and with commercial activity suffering Brexit worries, the economy is starting to suffer.

 

Yesterday’s preliminary Q1 GDP revision saw growth revised lower from 0.3% to 0.2% as consumer support waned. Household spending slowed considerably in Q1 as inflation rose seemingly uncontrolled.

 

Analysts are concerned that the Bank of England is pinning too much on the effect of Brexit on the economy and some tightening of monetary policy could be necessary. This is, of course, a double-edged sword as higher interest rates will quickly feed through into mortgages and consumer credit.

 

The effect of the 4% rise in Sterling against the dollar since the General Election announcement should cool inflation a little more but overall sentiment is turning.

 

The pound made one final “dying swan” move above 1.3000 yesterday before succumbing to the dual blows of slower growth and an opinion poll which saw the Government’s lead slashed yet again.

 

Opinion Poll puts lead at 5%.

 

The latest opinion poll, which was published yesterday, showed that the ruling Conservative Party has a lead of just 5% over the Labour Party. It is hard to take opinion polls seriously following the total inaccuracy of Brexit polls less than a year ago.  Having said that it doesn’t pay to disregard such information as Black Swans are always lurking!

 

Sterling fell following the cut in GDP and saw a further 0.4% fall overnight as momentum drained way. A new recent low of 1.2865 was made but some buying interest was seen at that level and a moderate recovery saw previous support at 1.2880 being regained.

 

It is likely that until the election, Sterling will remain in relatively tight but volatile ranges as liquidity dampens large moves. The minor “flash crash” last week is always possible. For some reason, the GBP/USD pair appears particularly susceptible.

 

As the dollar was racking up its worst performance of the year so far, Sterling has been unable to hang onto gains made recently. This does not bode well as sentiment as well as economic data is starting to turn negative.

 

The election campaign gets back under way today following the Manchester bombing and Theresa May will be on the front foot looking to regain support as the only viable party to handle Brexit.

 

Oil tumbles as OPEC disappoints

 

At Thursday’s meeting in Vienna, OPEC and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018. The initial agreement would have expired in June this year.

 

Crude oil plunged 5 percent following the announcement.

 

This announcement disappointed investors who were looking for not just an extension to the end of the cuts but an increase in the volume. A glut of oil has kept prices weak so far this year. OPEC, who once a major say in the global economy has waned in importance in recent years as producers outside the cartel have grown in influence. Also, the growth in contributions from more “maverick” producers like Iran, Iraq and Libya has led to supply gluts.

 

The commodity currencies of Australia, New Zealand and Canada all fell following the news. The AUD shed 1.1% to reach 0.7430 and the CAD, 0.75% to fall to 1.3500.

Read More

RELATED ITEMS


Do you Want Know more about Forex Brokers?