Sterling has edged lower on the back of unsuccessful cross party talks when it comes to Brexit. Mounting pressure on Prime Minister Theresa May to name her departure date is also weighing on the pound.
World Economic Growth
Gross Domestic Product (GDP) data for the first quarter of the year has now been published for most of the main world economies. Surprisingly they reflect a pick-up in the pace of growth everywhere, with some quite solid performances. The US figures stand out, where output grew by 0.8% (3.2% annualised) and the Eurozone and UK where GDP increased by 0.4% and 0.5%.
This pick-up in growth, though, is unlikely to continue. The stronger than expected growth for some economies in Q1 was due to a build-up of unsold inventories. These inventories are likely to run down in this quarter which will cause growth to slow again.
Trade tensions continue between the US and China. This will further weigh on international trade, therefore Central banks, can be expected to keep rates low short term.
Turning to the week ahead...
A busy calendar includes US retail sales, UK unemployment data and employment data is out in the Eurozone - Depending on the outcome of these we may see further volatility for these currencies.
The markets still remain sensitive to political sentiment.
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