FX round-up: Sterling falls after slowdown in Q1 GDP confirmed

Sterling was lower as UK's Q1 2016 gross domestic product (GDP) growth was confirmed to have slowed, with the US dollar down after a range of data and commentary from Federal Reserve officials.

At about 17:05 BST sterling was down 0.14% to $1.4677, also faltering against the euro and changing hands 0.39% below Wednesday´s close at €1.3123. Sterling also fell versus commodity currencies and the yen.

UK's final Q1 2016 GDP growth was 0.4%, in line with the flash estimate and confirming slowing growth as expected.

The looming UK vote on whether to retain EU membership or not was a factor, too, but increasing numbers of polls suggested Britain would remain in the single-currency bloc.

The matter is likely to remain sterling ballast through to the 23 June ballot, with downside risk thereafter if the UK unit departs the EU.

Meantime, the dollar was widely lower as more Fed officials jawboned on when the next US rate rise might come. Market speculation varied with predictions ranging for between two and three times in 2016, starting in June or July.

"We're just going to have to make a judgment as we get closer (to the Federal Open Market Committee (FOMC)) meeting in June," said Dallas Fed president Robert Kaplan overnight, noting there was also a July get-together.

He added that he would support a hike in the near future, and that Brexit risk would be a factor in the FOMC's decision-making.

After the close of London markets on Thursday, Federal Reserve governor Jerome Powell said that depending on the incoming economic data an interest rate hike may be appropriate fairly soon, but that he wanted to see a "significant strengthening" in economic activity in the second quarter.

Atlanta Fed boss James Bullard said he did not think there was any reason to pre-judge the FOMC's June meeting. "We can wait until we get to the meeting, see what the latest data says, and try to make a good decision there," he told CNBC.

In a raft of US data, new orders for US-made durable goods rose 3.4% on the month in April, beating views thanks to a swollen transportation element. Core durables, which exclude transportation, rose 0.4%, against a 0.1% gain in March.

The officials' words followed a string of mostly hawkish comments from their peers in recent weeks.

"It is believed that this shift toward a more hawkish message will ultimately be self-defeating," said Deutsche Bank. "The signal of rate hikes will tighten financial conditions, and ultimately prevent, or at least limit, the eventual rate increase."

The greenback was down 0.27% to €0.8941, and also against commodity issues. It fell 0.39% to 109.76 yen, whose bull-run continued. The dollar-index spot price fell 0.17% to $95.195.

All ears would thus be tuned into Fed chairwoman Janet Yellen's speech at Harvard on Friday for any hint on what her stance on the path which monetary policy might follow in June or July. Most expect her to remain schtum.

Macquarie Research observed that the "modest market reaction over the past week to Fed commentary is likely to increase its willingness to move near term," noting a Brexit vote would likely push that out to July.

"Our global team anticipates modest USD strength through year-end."