It was a fairly uneventful day for the Pound yesterday with little in the way of domestic data for currency traders to contend with. The Confederation of British Industry (CBI) announced that it had cut its 2015 UK growth estimate from 2.7% to 2.4% but markets were not moved by the downward revision because CBI Director-General John Cridland mentioned that the economy should rebound from the slowdown in Q1. Despite the downgrade Cridland was largely optimistic about the prospects for Britain, commenting that the ‘recovery has built up a good head of steam’.

There isn’t too much on the economic calendar today either but investors could be interested in the latest UK trade balance report if it deviates from the median market consensus. Traders anticipate another deficit score of around -£10 billion; anything higher could hurt the Pound whilst anything lower could give GBP rate a boost.

Euro

The Pound plummeted by around -150 pips against the Euro yesterday ahead of a report to be released this morning which is expected to confirm that the Eurozone outpaced Britain in the first quarter with quarterly GDP expansion of 0.4% compared to the UK’s 0.3%.

Despite branding the latest proposal from the IMF and EU as ‘absurd’ just three days ago, the Greek government announced yesterday that it is prepared to work with the institutions to agree upon a deal acceptable to both sides. It is possible that this shift in outlook bolstered the appeal of the single currency even though EU officials confirmed that there had been ‘no new developments’ in the negotiation process.

US Dollar

Sterling rallied by around 70 pips against the ‘Greenback’ yesterday to erase most of the US Dollar’s non-farm payroll related gains. It appears that rumours that US President Barack Obama is unhappy with the strength of the Dollar weighed on the ‘Greenback’ because some analysts felt that he could put pressure on officials at the Federal Reserve to hold off on hiking interest rates.

Although the Pound is likely to benefit against the Euro if Greece fails to agree a deal to remain inside the currency bloc, the far-reaching aftereffects of such an event would lead to a massive surge of safe haven flows and this could support the US Dollar in the event of the dreaded ‘Grexit’ scenario.

Canadian Dollar

GBP/CAD remained relatively flat yesterday as sentiment towards the ‘Loonie’ flatlined even though domestic data printed positively. Data showed that building permits surged 11.6% in April, building on March’s robust 13.6% rise, and a separate report showed that housing starts increased by a better-than-expected 201,700. The uptick in residential building activity marked a 10% improvement on the previous month and suggests that the Bank of Canada’s rate cut back in January is boosting builders’ confidence.

Australian Dollar

The Pound to Australian Dollar exchange rate slid by around half a cent yesterday as investors looked to lock-in profit from the near six-year high that GBP/AUD struck on Friday. The risk-correlated ‘Aussie’ looks likely to remain fairly weak against Sterling over the next few months because risk sentiment is likely to be constrained by Fed rate hike bets and Greek exit fears.

New Zealand Dollar

Sterling fell by around a cent-and-a-half against the New Zealand Dollar yesterday due to profit taking stances. However, it is possible that in the build-up to the Reserve Bank of New Zealand’s interest rate announcement on Wednesday evening GBP/NZD could return to the four-year high it struck last week. The RBNZ is not expected to loosen policy but speculation could easily drive jittery investors out of the volatile ‘Kiwi’ Dollar.