What’s been happening?

Pound Sterling – UK Markets 

The pound sterling posted modest gains against both the dollar and the euro on Friday. For the week, the pair weakened for the second straight week vs the greenback. The data published by the Confederation of British Industry on Friday showed that manufacturing activity in April grew at a soft pace. “The survey of 270 manufacturing firms showed that while output growth sped up slightly in the three months to April, it remained relatively modest overall. Manufacturers expect output volumes to be broadly flat in the next three months,” the CBI said.

Earlier in the day, British Prime Minister Theresa May’s spokeswoman told reporters that the PM was planning to have more talks with the opposition Labour party next week and reiterated that it was more important than ever for Northern Ireland to have strong political leadership and working for parties to restart talks as soon as possible.

Meanwhile, Fitch Ratings has announced that it kept the UK’s 'AA' Long-Term Issuer Default Ratings (IDRs) and Rating Watch Negative (RWN) unchanged, explaining that it would look to resolve the RWN after Brexit is finalised.

US Dollar – US Markets

The US Dollar Index advanced to its highest level of 2019 with the initial reaction to the GDP data but failed to preserve its momentum and closed the day in the negative territory on a daily basis.

Although the U.S. Bureau of Economic Analysis on Friday in its first estimate announced that the real GDP in the U.S. expanded by 3.2% on a yearly basis in the first quarter to beat analysts’ estimate of 2%, the underlying details of the report showed didn’t allow the greenback to capitalize on the strong reading. The fact that temporary factors such as government spending and inventories made large contributions suggested that this growth rate was unlikely to become sustainable. Moreover, the Personal Consumption Expenditure Prices rose 0.6%  following the reading of 1.5% in the fourth quarter of 2018 to hint at softening inflation.

Other data on Friday showed that the University of Michigan’s Consumer Confidence Index improved slightly to 97.2 in April’s final reading from 96.9 in the previous estimate.

Euro – European Markets

There were no macroeconomic data releases from the euro area on Friday and the shared currency stayed relatively quiet. Commenting on the monetary policy outlook, European Central Bank (ECB) Governing Council member Olli Rehn said some members of the Governing Council think that keeping rates at current low levels into next year could be warranted. “In this environment of economic uncertainty and weaker growth, there are grounds for continuing with very stimulating monetary policy,” Rehn stated and added that the big question for the ECB was whether the European economy was experiencing a temporary phase of slower growth or a long one.

What’s coming up? 

UK: The GfK’s Consumer Confidence Index will be the only data featured in the UK economic docket on Monday.

US: The U.S. Bureau of Economic Analysis will publish Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, alongside personal spending and personal income figures.

EU: The European Central Bank will release private loans data on Monday. Moreover, the European Commission will publish its Consumer Sentiment report, which will include Consumer Confidence, Industrial Confidence, Services Sentiment, and Business Climate indexes.