Over the weekend the Confederation of British Industry (CBI) suggested that despite the slowdown during the first three months of the year the UK economy grew at its fastest pace for 12 months during the second quarter. CBI chief Rain Newton-Smith commented that a ‘stellar increase’ in private sector activity combined with ‘increased spending power’ and ‘renewed momentum’ in the Eurozone had helped supercharge the British economy over the last three months.

And the Pound could receive a bit of a boost if this morning’s UK manufacturing PMI report corroborates the CBI statement and shows that private sector performance spiked in May. Markets are prepared for a score of 52.5 but anything above 53.0 could drive demand for Sterling higher.

Euro

The Pound to Euro exchange rate remained at elevated levels on Friday as policymakers in Athens failed to agree upon a deal to help keep the Hellenic nation in the 19-nation bloc.

In the final hour of the Wall Street session traders sold the single currency in large numbers, seemingly as a defence mechanism against any potential problems over the weekend. On Friday it was announced that Greek bank deposits plunged -€5.6 billion in April to an 11-year low of €139.4 billion, which was seen as a sign that Greek investors are growing increasingly concerned that their nation could be headed for capital controls or a return to the Drachma.

There were no significant developments over the weekend – German finance minister Wolfgang Schaeuble did offer his Greek counterpart Yanis Varoufakis some chocolate Euro coins as ‘nourishment for his nerves’ but that was not considered serious enough to pile added pressure on the single currency – but there is still a long way to go before a deal is reached and the Euro could continue to weaken as Greece moves ever closer to the abyss of an untimely Euro exit.

US Dollar

Sterling plummeted for the ninth time in nine days against the US Dollar on Friday as traders reacted to a slightly better-than-expected US GDP score.

Although the world’s largest economy’s first quarter GDP reading was downgraded from +0.2% to -0.7% year-on-year (+0.05% to -0.17% quarter-on-quarter) the ‘Greenback’ managed to avoid depreciating because markets had been primed for a slightly lower year-on-year score of -0.9%.

With exports down -7.6% and imports up +5.6% the rising trade gap subtracted the most from growth in 30 years. The rise of the US Dollar plus congestion at West Coast ports weighed on US trade, but economists are optimistic that a rebound will take place later on in the year.

Markets currently forecast a 55% chance that the Federal Reserve will raise interest rates in December of this year. Unless American data continues to slide, the ‘Greenback’ is liable to maintain a bullish bias against the Pound in the run-up to the Fed’s first rate hike.

Canadian Dollar

The Pound rallied against the Canadian Dollar on Friday afternoon in response to a surprise contraction in Canadian GDP. March’s monthly growth score came in at -0.2%, confounding expectations of +0.2% rise, and this brought the annualised GDP print down to -0.6%. The disappointing result marked the first contraction in four years and the worst economic reading since the 2009 recession, which caused some investors to increase bets that the Bank of Canada will look to bolster economic output with another rate cut later in the year.

Australian Dollar

Sterling remained tantalisingly close to a six-year high against the Australian Dollar on Friday as markets positioned themselves appropriately ahead of this week’s policy announcement from the Reserve Bank of Australia. Although the RBA is likely to leave interest rates on hold at 2.00% the recent slowdown in economic indicators has raised the prospect of a surprise slashing of rates and some traders sought to hedge against this possibility at the end of last week’s session.

New Zealand Dollar

The Pound to New Zealand Dollar exchange rate struck a fresh four-year high on Friday as concerns over the performance of the dairy industry continued to weigh on demand for the ‘Kiwi’. The nation’s largest dairy producing company, Fonterra, recently cut its payout to farmers and the expected downturn in economic activity has prompted some investors to hedge against the possibility of a rate cut from the Reserve Bank of New Zealand.