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The pound has performed strongly this week, somewhat boosted by the scheduled Trump/May meeting tomorrow.
Today we have key hard data to focus on, with the first reading of Q4 2016 GDP due out. It is expected to come in at 0.5% for the quarter, with the yearly figure at 2.1%.
UK PMI data has been solid, and the NIESR GDP estimate also points towards 0.5% and if so, the data will continue to support the pound. In addition, today we expect the government to produce the draft bill to trigger Article 50 today and this bill will be debated at a later date.
USD continues to give up value
The USD has continued to give up value after a strong finish to 2016. We can expect continued volatility around the USD as the market adjusts to Trump and his expected fiscal and economic plans.
Today we have US services PMI data to review. Services have struggled in the last couple of months, but we could see an uptick today. Risk appetite has pushed higher in recent sessions and the Dow Jones index hit a record high closing above 20,000 for the first time. It was surprising to see USD weakness across the markets with the backdrop of increased risk appetite and higher US bond yields.
Euro on back foot
The euro has been on the back foot with data from the German IFO survey yesterday coming in weaker than expected. In addition, in Italy the constitutional court voted to change parts of the electoral law, making it less likely that one party will get an absolute majority. The decision increases political uncertainty in Italy, and raises the chances of a snap election being called.
