The Pound is at a 3-week high against the US Dollar and very close to hitting $1.30 for the first time since last September. The Euro is also weakening as the markets await news of a possible change in the European Central Bank’s policy today. Tomorrow’s Bank of England meeting might send Sterling higher if the central bank’s growth forecast is more upbeat than expected.

The US Dollar is down against the Pound and the Euro, with Sterling making the most gains, so far. US President Donald Trump startled the markets by unexpectedly firing FBI director James Comey, underscoring the president’s unpredictability and creating market volatility.

Pound Sterling – UK Markets

Sterling gained a bit of ground against the Euro with the exchange rate set at €1.19. The rate marks a 3-week high for the British currency. Fears that Emmanuel Macron, the new president of France, will be a hardliner in the upcoming Brexit negotiations don’t seem to affect the Pound’s good performance.

According to the British Retail Consortium (BRC), UK retail sales in April rose by 5.6% from a year earlier, well ahead of the expectations for a 0.5% gain. This is the strongest result for the last 11 years. Some analysts said that Easter was the main reason for improved retail sales. However, this fact, combined with the upbeat PMI reports of last week, means that the British economy shows its resilience in an uncertain environment.

The British Pound rallied against the US Dollar setting the rate at $1.29. On Thursday, the Bank of England (BoE) is expected to announce that it will keep interest rates at 0.25%. Another part of the BoE’s announcement will be the inflation report, which analysts from Intesa San Paolo bank predict a downwards growth revision.

US Dollar – US Markets

On Wednesday, the US Dollar traded lower against the Euro by 0.15%. The US Dollar to Euro exchange rate was set at €0.91, with the US currency losing the previous days’ momentum. President Donald Trump played a key role in this downfall, since he abruptly fired James Comey, the director of the Federal Bureau of Investigation (FBI), making traders and investors feel uneasy.

Trump fired FBI director Comey over the handling of the probe into Hillary Clinton’s e-mails. Analysts are worried that Trump’s action will undermine progress in securing Congressional support for the tax reform.

US Commerce Secretary, Wilbur Ross, tried to calm down the markets suggesting that the US administration will use existing tools to enforce trade rules and to ensure that US goods are fairly treated. This is regarded as one more sign that the Trump administration is backing down from its election campaign promises.

Euro – European Markets

The Euro didn’t rise against the US Dollar over the FBI scandal, and remained flat at $1.09. However, analysts expect the pair to be volatile today, in anticipation of Mario Draghi’s speech, the head of the European Central Bank (ECB).

He is scheduled to address the Dutch parliament later today, and it’s his first public speech after the victory of Emmanuel Macron in France. “Super Mario,” as Draghi is also playfully called, has been formerly criticised as overly optimistic about the Eurozone. The latest data, showing an annual growth of 1.7% in the Eurozone economy, silenced his critics.

Earlier this year, Mr Draghi announced that the ECB is continuing its stimulating programme until the end of the year. However, some experts believe that now, without the threat of an anti-EU French president, the ECB might change its policy. The next meeting of the bank’s leaders is in June, but Draghi’s speech today is expected to boost the Euro a bit, recovering the currency’s losses last week, before the second round of the French elections.

The Euro marks another success against the Swiss Franc. The single currency reached to a seven-month high on Tuesday at 1.09 CHF. Today’s level remains close to those numbers.

Other Currencies – Highlights

The tension between European officials and the British government over the upcoming Brexit negotiations weakened the Euro and the Pound against the Japanese Yen. The currency reached to ¥148.01 against Sterling today, the highest level since December last year. According to analysts, the uncertainty around Brexit will “weigh on European currencies,” but it will continue boosting the Yen.

The FBI drama in the US has boosted most of the commodity currencies – South African Rand, Australian and New Zealand Dollar – against the US Dollar. The New Zealand and the Australian Dollar stayed flat against the Pound at 1.87 NZD and 1.76 AUD, respectively. The South African Rand is recovering against Sterling. On today’s market the Pound is trading at 17.54 ZAR.