Euro GDP stronger than expected

Sterling continues to climb versus the dollar, returning towards 12-week highs against a U.S. currency pegged back by expectations that the Federal Reserve is unlikely to raise interest rates any time soon.

Gains in the pound were capped, though, after a YouGov poll for the Times showed opponents of Britain’s European Union membership edging into the lead in the run-up to a June 23 referendum on the issue, despite an intervention on the “In” side by U.S. President Barack Obama.

Sterling rose 0.3 percent on the day to $1.4586, not far from a 12-week high of $1.4640 struck on Tuesday. The euro was slightly lower at 77.65 pence.

The dollar was lower across the board after the Federal Open Market Committee hinted it was in no hurry to tighten monetary policy amid an apparent slowdown in the U.S. economy.

Given that first quarter U.S. data have been soft overall, we will stick to our guns and support that the Fed will raise rates only once this year, with September and December being the most likely contenders.

Data just released at 10am shows the eurozone grew by 0.6% in the first three months of 2016.

That’s twice as strong as in the previous three months, and much stronger than expect.

Better-than-expected growth in France and Spain helped the eurozone to beat forecasts, and grow faster than the UK (which expanded by 0.4% last quarter).

We could see the GBP/EUR drop off slightly through out the day.

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