The US Dollar staged a slight retreat from its earlier zenith today, buoyed by an optimistic duo of Personal Consumption Expenditures and Price Index figures bundled within the Gross Domestic Product announcement. These robust indicators, arriving ahead of the imminent US PCE release on Friday, amplify the clamor for a potential rate hike, particularly following the fervent Consumer Price Index (CPI) report two weeks ago. The prevailing query now hangs in the air: will the Federal Reserve opt for a pre-emptive hike before contemplating any cuts? 

EURUSD treads waters after a failed test of a crucial short-term resistance area, indicating that the market maintains hopes about the Euro’s recovery:

In the realm of economic data, the focus now shifts from the GDP figures to the forthcoming Pending Home Sales statistics and the Kansas Fed Manufacturing index. A potential nosedive in the Manufacturing index, echoing the recent contraction witnessed in the S&P Purchase Manager Index, could potentially alleviate the surge in the US Dollar Index (DXY) post the GDP disclosure.

The headline GDP figures contracted from 3.4% to a more tepid 1.6%, while the PCE witnessed a remarkable ascent from 1.8% to a sizzling 3.4%. Core PCE mirrored the headline trajectory, ascending from 2% to an impressive 3.7%. Meanwhile, the GDP Price Index soared from 1.7% to a notable 3.1%. On the labor front, Initial Claims for the week ending April 19 demonstrated resilience at 207,000, surpassing the previous 212,000. Continuing Jobless Claims for the week ending April 12 also exhibited fortitude, registering at 1.781 million against the prior 1.796 million. 

According to federal funds rate futures, there's an 83.1% likelihood that June will maintain the status quo on the Federal Reserve's funds rate. The odds of a rate cut are now balanced at 50%-50% for July, whereas September indicates a 70% probability of rates dipping below current levels. 

Across the pond, the Pound Sterling grapples with resistance near the psychological threshold of 1.2500 against the resurgent US Dollar (USD) in Thursday’s early American trading session. The GBP/USD pair experiences downward pressure as the USD rebounds sharply post the unveiling of the Q1 Gross Domestic Product (GDP) report, spotlighting a notable surge in inflation. The preliminary GDP Price Index leaps by 3.1% from its preceding 1.7%, fostering anticipations of the Federal Reserve (Fed) maintaining a prolonged spell of restrictive interest rates. 

Conversely, the US economy experiences a moderated growth pace of 1.6% against the anticipated 2.5%, exacerbating apprehensions surrounding the economic trajectory. 

In the UK arena, investor sentiment received a boost following the preliminary PMI report from S&P Global/CIPS for April, unveiling a surge in new business volumes across the private sector. The agency further notes that the pace of overall activity has been the most robust since May 2023. However, this expansion is predominantly anchored in the service sector, with manufacturers witnessing a slight dip in order books, tempering the overall optimism.