Despite Fitch cutting the UK’s AAA credit rating on Friday, the pound finished higher yesterday against all 16 of its major peers amid speculation that the UK will indeed avoid a triple dip recession.

According to a Bloomberg survey forecast, Thursday’s release of first quarter GDP will show that the UK actually expanded by 0.1%. As a result the pound gained by 0.4% against the US dollar and by 0.3% against the euro, threatening to break out of its down trending trading range.

Despite Fitch cutting the UK’s AAA credit rating on Friday, the pound finished higher yesterday against all 16 of its major peers amid speculation that the UK will indeed avoid a triple dip recession.

According to a Bloomberg survey forecast, Thursday’s release of first quarter GDP will show that the UK actually expanded by 0.1%. As a result the pound gained by 0.4% against the US dollar and by 0.3% against the euro, threatening to break out of its down trending trading range.

Despite seeing some political stability in Italy where Giorgio Napolitano was sworn in to a second term as Italy’s president, the euro made losses across the board as speculation continues, following comments made by European Central Bank Executive Board Member Joerg Asmussen, that the ECB may need to cut interest rates to boost the economy should economic data continue do disappoint. Even better than expected consumer confidence figures, which came in at -22.30 beating expectations of -23.85, failed to lift the euro.

Existing home sales in March fell in the US to 4.92 million from 4.95 million in February. The data disappointed the markets showing that the housing sector still faces setbacks on its way to a recovery. As a result the US dollars early gains in the day run out of steam as the disappointing figures once again fuelled talks that the Federal Reserve won’t be in any rush to scale back its bond-buying program.

Overnight data from China revealed a slowdown in the manufacturing sector in April, with the figures coming in at 50.5, falling short of an expected 51.4 and below the 51.6 that we had for March. This adds to the poor figures from China last week and adds to concerns that perhaps the largest Asian economy is faltering and thus boosted demand for safe haven assets, with higher yielding assets such as the Australian dollar and New Zealand dollar weakening off the back of the news.

We have quite a busy day with regards to economic data today. In the morning we have manufacturing and service sectors figures due for release from the euro zone. Weaker figures could well put the ECB under pressure to cut interest rates or consider utilising other measures to boost the economy. Public sector net borrowing is also due for release from the UK this morning and from the US the housing sector will come under focus again as will the manufacturing sector.

Key Announcements:

8.58am – EUR – Markit Manufacturing PMI (Apr): Fell to 46.5 against an expected 46.8.

8.58am – EUR – Markit Services PMI (Apr): Came in as expected as 46.6.

9.30am – GBP – Public Sector Net Borrowing (Mar): The deficit is expected to grow to £14bn.

13.30pm – CAD – Retail Sales (Feb): Expected to fall to 0.3%.

13.45pm – CAD – BoC Governor Mark Carney Speech.

13.58pm – USD – Markit Manufacturing PMI (Apr): Expected to fall to 54.

15.00pm – USD – Housing Price Index (Feb): Previous figures were 0.6%.

15.00pm – USD – New Home Sales (Mar): Expected to improve to 420,000.

22.00pm – NZD – RBNZ Interest Rate Decision (Apr) and Press Conference: Interest rate expected to be held at 2.5%.