Could today’s US GDP numbers send EUR/USD to 1.11?
The common currency traded around its lowest level in almost two years against the US Dollar on Friday morning as investors awaited this afternoon’s first quarter US GDP numbers.
A
string of fairly underwhelming economic data out of the Eurozone, particularly in Germany, has crushed the common currency in recent weeks. A confirmation that the US economy is continuing to grow at a steady clip in spite of the broad slowdown globally could send the EUR/USD rate even lower today.

The data will be released at 13:30pm BST with the market upping its prediction to 2.1% annualised growth in the past couple of days from the previously anticipated 1.8%. Thursday’s US durable goods order data for March boded well for a strong number this afternoon. Orders jumped by 2.7% last month, well above the 0.8% increase priced in and its strongest expansion in seven months.

Figure 1: US Durable Goods Orders (2015 - 2019)

Source: Thomson Reuters Datastream Date: 26/04/2019
With the bar for an upside surprise in the GDP numbers now even higher than before, it would likely take a pretty strong number to force the EUR/USD rate towards the 1.11 mark. In the event of a downside surprise, the Euro would likely receive some assistance as the market reevaluates the magnitude of the economic divergence between the US economy and the rest of the world.

Sterling struggles on lack of Brexit progress



In the UK, Sterling ended London trading more-or-less where it began it on Thursday. The Pound has struggled all week on an apparent lack of progress towards a Brexit solution. Cross party talks between the Tory Party and Labour have so far yielded very little. Nicola Sturgeon’s fresh calls for another Scottish Referendum has far from helped Sterling, renewing concerns regarding a strained relationship between Westminster and Holyrood.

On the data front, yesterday’s CBI trades survey was actually pretty solid, although with attention shifting back to Brexit, macro news is taking a back seat again.
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