U.S. GDP Data Disappoints
Revised U.S. growth figures have just come in, showing that the economy has grown at a slower than expected pace, increasing at an annualized rate of 2.2% as opposed to an anticipated rate of increase at 2.4%. Both numbers are down on the previous quarter’s rate of growth, which was 2.6%.
The greenback had been rising firmly during the London session, and the initial reaction to the downwards revision was negligible – the Dollar seems to be continuing its push to rise higher as at the time of writing, just prior to the New York open. The New York session often causes a sharp turn in these conditions, so we may see the Dollar sold off and reversing once the NYSE opens.
The Dollar currently seems strongest against precious metals, and in terms of major currencies, the British Pound. The latter currency has been weakened by the fact that the British Parliament, having seized control of the Brexit process, was unable to agree upon a single proposed course of action. The Government will now step back in and has what seems to be a final chance to get a deal agreed with the E.U. on the terms of Brexit. However, it seems that despite the late hour there is not even anything close to a majority for the deal, and the Government is signaling there will be a vote about something on Friday, but probably not on the deal.
If this expected scenario plays out, the U.K. will be two weeks away from a “no deal” Brexit deadline, and the final stage of the Brexit drama will arrive. I believe that at the last minute, Parliament will vote for anything except a no deal Brexit and will take whatever is on offer. This will see the Pound rise, but it is likely to weaken as we approach 12th April if a deal is not finalized or very close.