Dollar selling continued in the morning after reports confirmed that the US and South Korea held FX talks on 5th May. Markets took news of the talks as a reason to speculate that South Korea won’t seek to stop its currency rising against the dollar and that exchange rates could well feature in trade talks with the US. However, some of these losses were reversed by the close of European trading hours.
*Daily move - against G10 rates at 7:00 am, 15.05.25
** Indicative rates - interbank rates at 7:00 am, 15.05.25
UK GDP for Q1 came in higher than expected this morning, with growth at 0.7% above the 0.6% expected by economists. Growth was boosted by an increase in exports to the US ahead of Trump's tariffs, as well as an increase in activity in the services and construction sector.
Although the GDP figures paint a promising picture, sterling's trajectory has been somewhat erratic. This can be attributed to the report's retrospective nature, contrasting with the market's forward-looking perspective. Concerns linger for the remainder of the year, fuelled by diminished business confidence, trade tensions and tariffs.
For the rest of the day, focus falls on the US again with retail sales, PPI data and jobless claims. A miss on PPI and retail sales could well give another reason for dollar selling to continue given the market's current view on the greenback.
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