Sterling was again damaged by political concerns with Prime Minister May under severe pressure to resign.

Federal Reserve minutes reiterated the message of patience with no overtly dovish elements in the commentary.

Sterling was again damaged by political concerns with Prime Minister May under severe pressure to resign as political concerns also undermined the Euro.

The US dollar continued to gain important support from a lack of confidence in other majors and low yields elsewhere.

Risk appetite remained fragile with global equity markets losing ground due to on-going trade concerns.

Defensive currencies continued to attract support with gains for the yen and Swiss franc. Oil prices came under pressure after a larger than expected inventory draw. Precious metals were unable to make headway while bitcoin lost ground.

The UK CPI inflation rate increased to 2.1% for April from 1.9% previously, although consensus forecasts were for a larger increase to 2.2% and the core rate was unchanged at 1.8%. The April government borrowing requirement was £5.8bn for April, fractionally below last year’s figure and the lowest April deficit since 2007. The impact of economic releases was very limited given the focus on political developments with no shift in Bank of England expectations.

Prime Minister May’s position continued to deteriorate during the day with even stronger calls for her to resign given the hostile reception to the latest Brexit proposals. Sterling continued to lose ground on negative sentiment and Brexit fears with GBP/EUR dipping below 1.1350 level while GBP/USD dipped to fresh 4-month lows near 1.2625.

After the European close, Cabinet member Leadsom announced that she was resigning. Political activity will be limited on Thursday as the UK votes in the EU elections, but strong speculation that May will resign on Friday continued. Weaker risk conditions and political chaos continued to undermine Sterling as GBP/USD traded below 1.2650 on Thursday with GBP/EUR near 3-month lows at 1.1330 after registering daily losses for a record 13 successive sessions.

Economic Calendar

08:15Markit Mfg PMI(JUN)5050
08:15Markit Serv PMI(MAY)50.850.5
08:30EUR German PMI Composite(MAY)51.752.2
08:30EUR German Manufacturing PMI (M/M)(MAY)-44.4
08:30EUR German PMI Services(MAY)55.155.7
09:00Euro-Zone PMI Manufacturing(MAY)-47.9
09:00Euro-Zone PMI Composite(MAY)51.851.5
09:00Euro-Zone PMI Services(MAY)53.252.8
09:30GBP Retail Sales (Y/Y)(APR)-6.70%
09:30GBP Retail Sales (M/M)(APR)-1.10%
09:30GBP Retail Sales ex-Fuel (Y/Y)(APR)4.00%6.20%
09:30GBP Retail Sales ex-Fuel (M/M)(APR)-0.30%1.20%
13:30CAD Wholesale Sales (M/M)(MAR)-0.30%
13:30USD Continuing Jobless Claims1.670K1.660K
13:30USD Initial Jobless Claims215K212K
14:45USD Manufacturing PMI(MAY)-52.6
14:45USD Markit Services PMI(MAY)-53
15:00USD New Home Sales(APR)-692M
15:00USD New Home Sales Change(APR)-4.50%
18:00FOMC Member Raphael Bostic speech--
18:00FOMC Member Mary Daly Speech--
18:00FOMC Robert Kaplan Speech--
23:45NZD Trade Balance (M/M)(APR)-922M
23:45NZD Trade Balance (Y/Y)(APR)--5.620M

*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.