The Pound weakened this morning following a report that the UK owes the EU €100bn for the Brexit bill. It rose when Brexit minister Davies disputed the bill, building more strength after Construction PMIs showed that the UK is building at the fastest pace in 4 years.

The US Dollar is falling against the Euro today, as investors doubt there will be any significant news from the US Federal Reserve (Fed) meeting today. The Pound is still under pressure about Brexit, but it’s at a 7-month high against the US Dollar. If the FED keeps the May interest rates unchanged and the 5 data releases are also disappointing, the Pound could hit $1.30 this afternoon.

Pound Sterling – UK Markets

The Pound remains stable against the Euro today at €1.18, after sliding only 0.2%. It has been volatile this morning after the Financial Times reported that Britain’s Brexit bill could be €100bn, but soon recovered after Brexit minister David Davis asserted that Britain won’t “be paying 100 billion.”

After a volatile affair in April, the pair enters a steadier phase at the beginning of May, although according to analysts, this is “unlikely sustainable”. The political events in Europe will influence the movement of Sterling against the Euro and will play a key role over the next few months.

However, against the US Dollar, the Pound is losing some of its grip. The GBP/USD exchange rate is floating around $1.28 - $1.29, after EU leaders warned that they will pursue a punitive approach on Brexit. However, it is expected that Sterling will quickly bounce back and continue its “bullish phase that started 2 weeks ago”, chasing the break above $1.30.

This morning also saw the release of Markit’s construction PMI which has jumped to 53.1 from 52.2 in March. This shows that Britain’s construction sector expanded at its fastest pace in four months in April. The growth was driven by “faster rises in civil engineering and residential building activity”, according to Markit.

US Dollar – US Markets

The US Dollar is a bit higher against the major currencies today, as economists are anticipating that the US Federal Reserve will keep interest rates unchanged. The central bank is holding a two-day meeting starting this afternoon. Most of the analysts predict that the Federal Reserve will leave its policy untouched this week, but they are expecting a rate increase in June.

Against the Euro the US Dollar surged 0.19% and is currently at €0.91.

The US Dollar is also stronger against the Yen, reaching almost a six-week high at 112.12 YEN. According to investors, the geopolitical crisis with North Korea “had weighed on the dollar against the yen recently....But the focus is shifting to whether the (strength) of U.S. economic fundamentals is for real”.

Euro – European Markets

The Euro seemed unable to capitalise on the good GDP results released by Eurostat on Wednesday. The single market currency lost ground (0.2%) against the US Dollar, with the rate set at $1.09. Eurozone’s GDP grew by 0.5% in the first quarter of 2017, as it was expected. On annual basis, Eurozone’s economy maintained a 1.7% growth rate, in line with forecasts. According to data released earlier, Germany’s unemployment rate, in April, remained stable at 5.8%, marking an all-time low.

Investors and traders are expecting the result of Sunday’s second round of presidential elections in France, in which analysts predict victory for Emmanuel Macron. However, an HSBC report suggests that potential low turn-out and unpredictable vote transfers mean nothing is certain. The bank’s analysts stress out that a narrow win on Sunday’s election for Macron might make it harder for him to implement promised policies, in combination with the June parliamentary elections.

Other Currencies – Highlights

The Sterling to Australian Dollar exchange rate went up by 0.5%, settling at 1.72 AUD. The Reserve Bank of Australia's (RBA) announcement that said it’s going to keep the interest rates at 1.5% helped the Australian Dollar to get stronger briefly before falling again. According to analysts, the Pound is expected to keep the momentum against the Australian currency, despite the RBA’s optimism for the economic condition.

The New Zealand Dollar managed to turn the tide against the Pound, gaining some ground after many days of losses. The rate was set at 1.86 NZD, with the Kiwi increasing its value by 0.15%. The reason for this change was the announcement that unemployment declined in the Pacific country. New Zealand Statistics reported that unemployment dropped below 5%, adding that the rate among men is the lowest since 2007.

Sterling continued its rally against the South African Rand setting the exchange rate at 17.2 ZAR. The South African currency still seems unable to recover, affected by the downgrade to “junk” status of the country’s government issued debt by S&P and Fitch.