Sterling might benefit from UK GDP data

Contrary to the euro zone the UK was so far able to record strong growth rates. The 0.4% qoq recorded in Q1 are likely to have been a bit of a slip up. The analysts polled for today expect an average of 0.7% qoq in growth. 

For the FX market growth rates of this magnitude would probably be further proof that the Bank of England will soon start raising rates. Over the past week Sterling had already benefitted from speculation that the BoE's first rate step might come as early as this year. 

"Should the data surprise even slightly on the upside speculation of this nature is likely to be fuelled once again supporting Sterling. On the other hand the data would have to disappoint massively for the market to price out rate hikes, putting Sterling under pressure", says Commerzbank.