Trade in the US dollar is thin ahead of today’s gross domestic product (GDP) release, with traders eager to know how the American economy is faring against a background of slowing global growth. Forecasts of US Q1 GDP have strengthened in response to recent better-than-expected US data releases. Commenting on this, Sam Bullard, Senior Economist at Wells Fargo Securities said: “The economy remains solid, but we anticipate a slowing in the pace of growth in the medium term as the tailwinds from fiscal stimulus fade and the headwinds of tighter monetary policy take hold.”
On Thursday, data revealed that US non-defence capital goods orders excluding aircraft rose by a higher-than-forecast 1.3 per cent.
Meanwhile, March’s durable goods orders hit an eight-month high, rising by 2.7 per cent.
This sparked hopes that the US manufacturing sector, which has been battered by the trade tensions with China, and a weakening global economy, will begin to show further strength over the next few months.
Further data revealed that US jobless claims saw their largest weekly gain in 19 months.
The week than ended on 20 April saw initial claims for unemployment in the US rise by 37,000, compared to the previous week.
However, despite the rise in jobless claims, the underlying trend continued to boost the strength of the US labour market, which buoyed the greenback on Thursday.
Sterling was generally muted following news that cross-party talks between the Conservatives and the Labour party had continued to make very little progress.
Looking ahead to this afternoon, the US dollar could fall against the pound following the release of the US preliminary Q1 GDP.
If GDP growth is not as strong as it was in the last quarter of 2018, it could dampen sentiment in the US dollar.
Also due to be released is the US Michigan Consumer Sentiment Index which will likely cause movement of the pairing.
If sentiment rises in April, it could provide an upswing of support for the exchange rate towards the end of this week’s session.