Markets await eurozone inflation data
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Daily Currency Update
Data on Thursday showed that the US economy grew at a slower pace in the first quarter than initially reported, due to softer consumer spending on goods. Gross domestic product rose 1.3% annualized in the first three months of the year, below the previous estimate of 1.6%. Employment data showed weekly insurance claims increased by 3,000, which was 1,000 above the forecast, and pending home sales saw a large slump in April, falling 7.7%, well below the forecast of -1.1%. The US dollar, which had pushed Sterling and Euro lower over the previous 24 hours, lost ground throughout the day. GBP/USD currently sits at 1.2705, with GBP/EUR at 1.1740.Key Movers
A significant day lies ahead with key macroeconomic data releases. Europe will provide a flash estimate of its year-on-year consumer price index this morning. Little to no change is expected, with the previous 2.7% from April likely to be mirrored this month. However, preliminary German figures suggest that inflation is decreasing, a key factor in maintaining expectations for a rate cut next week.This will be followed by the US core PCE price index, which measures the latest changes in the prices of goods and services purchased by consumers. This release has become the Federal Reserve's (FED) preferred measure of inflation. Market participants will closely monitor the release for any further indicators of when the FED might start to lower rates.
It is safe to say that we could see a volatile day across the FX market in response to these releases. Currently, EUR/USD is at 1.0825.
Expected Ranges
- GBP/USD: 1.2645 - 1.2800 ▼
- GBP/EUR: 1.1670 - 1.1775 ▼
- GBP/AUD: 1.9090 - 1.9245 ▲
- EUR/USD: 1.0760 - 1.0890 ▲