The pound consolidated against the euro during early trade after the Confederation of British Industry reported that UK economy will grow slower than previously expected. The CBI gauge is expecting for UK Gross Domestic Product (GDP) to increase by 1.7% in 2011, compared with previous prediction of 1.8% growth. CBI also expects for the growth in 2012 to deteriorate to 2.2% instead of 2.3%. There are no economic releases or public speeches scheduled for today. Looking ahead to this week, Bank of England May Inflation report headlines the economic calendar as release could offer insights on when the MPC (monetary policy committee) will increase interest rates from record lows. Also scheduled for this week is the BRC retail sales and RICS housing data for April. Expect for the pound to experience excessive volatility throughout the week as BoE’s Inflation report is expected to complicate things for the UK central bankers.
The euro gained against the dollar during the overnight trade on speculation that debt crisis within single currency region won’t keep the European Central Bank from increasing interest rates in near future. However, European officials may extend its 110 billion euro rescue plan for Greece, as they believe that Athens will be unable to raise the funds before deadline. The euro consolidated across the board last week after ECB President Jean Claude Trichet said that central bank may not increase interest rates at their next meeting. Looking ahead to this week, German first quarter GDP release headlines the economic calendar, with the expectations for the figure to double to 0.8% from the previous reading.
The dollar started the week lower across the board as stocks rebounded during Asian session cutting demand for the US currency. Greenback came under selling pressure last week after better than expected US jobs figures showed signs of additional recovery in the world’s largest economy, pushing investors into riskier assets. Looking ahead to this week, US trade deficit figures headline the economic calendar, with the expectations for the numbers to grow to 48 billion dollars from 45.8 billion.
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