The pound is higher across the board this morning after better than expected consumer confidence and house price data. An index of sentiment rose by 10 points to –21 in May from the previous month, the highest reading in five months. In addition, Nationwide Building Society reported that house prices increased by 0.3% this month, beating the analyst expectations of a 0.1% rise. Bank of England officials are closely watching all the economic releases in order to decide when to tighten monetary policy after UK inflation surged to 4.5% in April, the fastest since 2008. BoE Governor Mevyn King said that it’s still early to raise interest rates because the recovery remains weak.
The euro remained under pressure against most of its major rivals before the release of Eurozone consumer sentiment scheduled for today at 10:00. The consumer confidence gauge is expected to consolidate to 105.7 in May, after reaching 106.2 in the previous reading. Single region currency came under pressure yesterday after Luxembourg Prime Minister Jean Claude Juncker said that International Monetary Fund (IMF) may not release its share of a 12 billion euro aid package to Greece next month. Expect for the euro to remain under pressure as concerns about sovereign debt are spreading around the region.
The dollar consolidated against most of its major rivals ahead of the consumer spending release today that is projected to slow down in April. Growth in consumer spending is estimated to slow to 0.5% in April, the smallest gain in three month. Pending home sales are also scheduled for today, with the expectations for the figure to drop by 1% in April. Greenback dived to its lowest level in two weeks on speculation that fragile economic recovery will deter the Federal Reserve from raising interest rates anytime soon. Expect for the dollar to remain under pressure against its major peers as world’s largest economy is not picking up the desirable pace of economic rebound.
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