Yesterday was an extremely quiet day for the pound, with zero key data and no speeches from government members. Reports in UK press said that David Cameron would remove any minister that was against an EU referendum, however this was quickly dismissed by Cameron, who said that his comments were misinterpreted in regard to the British Governments ability to leave the EU in a future referendum.
The only minor piece of data concerning the pound was that The Confederation of British Industry downgraded the UK’s growth forecast to 2.4% in 2015, and 2.5% in 2016, down from 2.7% and 2.6% respectively, posed by a possible ‘messy’ end to the Greek crisis and EU referendum.
The US Dollar also experienced a quiet day. Due to lack of data coming out of the US, the markets were sentiment driven and whilst slightly choppy throughout the session, GBP/USD closed at roughly the same levels as the opening price. The US sold $48bn dollars’ worth of 3 and 6 month bonds, pushing the yields to 0.015% and 0.080% respectively.
Fed member Dudley openly stated yesterday that a rate hike is expected to occur this year and that the difference between market expectations and timing of rate lift-off is extremely close, which was taken as a surprise given Dudley’s usual dovish stance. There were reports yesterday that Obama announced that the USD is too strong and could potentially damage exports which was the reason for a choppy session, however a comment from a US official was also backed up by Obama who stated at the G7 meeting that the USD strength is not a cause for concern. Obama also pointed out at the G7 meeting after speaking with Angela Merkel, that sanctions on Russia must stay in place until it implements a deal to end fighting in the Ukraine.
Talks between Greece and the Eurogroup remain an uncertainty with regards to the final outcome. Greek PM Tsipras said the country will not agree a third bailout program nor accept an agreement without the restructuring of their debt. Tsipras stated there is no deadline in regards to ongoing negotiations and that talks with creditors have entered the final stage. However conflicting comments from the European Commission President Juncker suggested he is losing patience with Greece and is yet to receive a list of reforms from the troubled nation that could resolve the ongoing stalemate. A comment from Greek Finance minister Varoufakis said that discussions with German Finance Minister Schaeuble had been productive. This did give analysts some confidence in the EUR, with the EUR making gains against both the pound and the dollar.
No major announcements
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