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Week Ahead: All eyes on PMI and GDP data

The week starts with manufacturing and services PMI from Europe. LCG analyst Mauro Fellner is expecting positive results and says this may be the main driver for European growth. US flash manufacturing PMI will also be released on Monday and this may affect the EURUSD, which is currently trading above the 1.1200 mark.

On Tuesday, Germany will release GDP results. Year on year data for Q1 is expected to be revised to 1.6% from 1.3%. Next week’s ZEW Economic Sentiment Index and IFO are likely to confirm an expansion in growth, which may push the DAX away from the side-lines.

The Bank of Canada will hold its rate decision on Wednesday and Mauro is anticipating no change in interest rates. The massive Canadian wildfire that displaced thousands of people in Alberta is not expected to affect monetary policy in the long-term. 

On Thursday, it’s the time for the second estimate of UK GDP for Q1 and Mauro expects it to remain unchanged at 0.4%, with other interesting data such as the preliminary investment for Q1. The last quarter contracted by 2%, most likely caused by the political uncertainty that’s affecting the UK ahead of the referendum in June.

A positive revision of 0.8% is anticipated for Friday’s preliminary US GDP for Q1. This means Cable, which is now trading at 1.4510 might come under pressure and after the rally of GBP, the retracement that started on Friday might continue to a full recovery. There is also a possibility that sterling may continue its rally, and head to 1.4660, and even to 1.4768 (May the 2nd top level).