Sterling pushed higher in early Europe on Wednesday with positive Brexit rhetoric underpinning sentiment.

US data was mixed with a strong ADP jobs report offset by a 30-month low for the ISM manufacturing survey and the releases triggered net dollar losses.

The Fed statement was relatively dovish with references to lower inflation, but Chair Powell downplayed the potential for lower interest rates

After initial losses, the dollar reversed sharply on Powell’s comments with marginal net EUR/USD losses on the day while commodity currencies also came under pressure.

Sterling was underpinned by speculation that a Brexit compromise deal was edging closer. Oil prices were hit by a very substantial inventory build.

US equity markets declined significantly after Powell’s comments while many global bourses were closed for holidays.

Sterling pushed higher in early Europe on Wednesday with positive Brexit rhetoric underpinning sentiment. The UK PMI manufacturing index declined to 53.1 for April from 55.1 and in line with consensus forecasts. New orders growth slowed with notable weakness in export orders while the rate of stock-building slowed as Brexit uncertainty remained important. Business optimism strengthened to 7-month high and consumer borrowing beat expectations with Sterling resilient after the data.

A Labour Party spokesman stated that there had been clear evidence of the government being willing to explore shifts in its Brexit position, but obvious opposition to some of the changes necessary to secure an agreement. There were also reports that Prime Minister May was preparing to keep the UK aligned with EU customs rules.

Sterling maintained a firm tone and GBP/USD pushed to highs of 1.3100 following the Fed statement. A dollar reversal pushed the pair lower, but Sterling was resilient, and GBP/EUR remained on the defensive with highs around 1.1650 ahead of Thursday’s Bank of England statement and inflation report.

Economic Calendar

Expected Previous
08:30 CHF SVME PMI(APR) - 50.3
08:45 Markit/ADACI Mfg PMI(APR) 47.4 47.4
08:50 Markit Mfg PMI(APR) 49.6 49.6
08:55 EUR German Manufacturing PMI (M/M)(APR) 44.5 44.5
09:00 Euro-Zone PMI Manufacturing(APR) 47.8 47.8
09:30 GBP PMI Construction(APR) 49.8 49.7
10:00 EUR European Commission Economic Forecasts - -
12:00 BOE MPC Vote Cut(MAY 08) 0 0
12:00 BOE MPC Vote Hike(MAY) 0 0
12:00 BOE MPC Vote Unchanged(MAY) 9 9
12:00 BoE QE Purchase Target(M/M)(MAY) 435B 435B
12:00 BoE Rate Decision(M/M)(MAY) 0.75% 0.75%
12:00 BoE Monetary Policy Meeting Minutes - -
12:30 BoE Gov Carney Speaks - -
13:30 Nonfarm Productivity (Q/Q) 1.20% 2.20%
13:30 USD Continuing Jobless Claims 1.659K 1.655K
13:30 USD Initial Jobless Claims 220K 230K
15:00 USD Factory Orders(MAR) 0.70% -0.50%
18:30 German Buba President Weidmann speech - -
18:30 ECB Praet Speech - -

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.