Focus turns to US Inflation this afternoon

12th May 2017 Market Update

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?? GBP - Yesterday’s Super Thursday announcements were the least bit surprising. The interest rate stayed the same as did the asset purchase facility programme. The voting was pretty much the same too, except there was one less member than normal, so instead of 8-1 the votes were 7-1.

The bigger news was that the BoE raised its inflation forecast for this year to 2.7% but reduced its economic growth forecast. The pound lost around 0.4% across the board.

Today there will be no data from the UK with the focus turning to next week's inflation and retail sales figures.

?? EUR - In the European economic bulletin it was announced that the ECB had raised their GDP target fractionally higher and lowered their inflation targets as well. Unsurprisingly this had very little affect.

This morning German 1st quarter growth figures came out as expected which has shown very little movement. Later today industrial production for the bloc is expected but no forecast has been released.

?? USD - Both PPI and initial jobless claims were slightly bettter than forecast but it made little impression on the rates.

Today, inflation figures will be the focus and are expected to drop to 2.3%. Retail sales will also be released and they are expected to improve to 0.6%.


Key Announcements

?? EUR
10.00am: Industrial Production – Expected to rise to 2.3%.

?? USD
1.30pm: Inflation. Expected to drop to 2.3%
1.30pm: Retails Sales. Expected to rise to 0.6%


Our View: An up and down week for the pound looks to end where it started. Looking ahead and following The Bank of England's coy stance, the pound may struggle to continue to push higher. With the general election less than a month away economic data may be overlooked.


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