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Pound Gains Before CPI Report

The pound strengthened across the board during the overnight trade on speculation that UK inflation remained at the highest level in almost 3 years. Consumer price data for May are released at 9:30, with the expectations for the CPI inflation to remain unchanged at 4.5% from April reading. MPC member Martin Weale said yesterday that Bank of England should increase the base interest rate in order to bring inflation back to target. According to Mr. Weale a more immediate rise in the policy rate would give the MPC more flexibility to respond to inflationary pressures. Separately, the May RICS survey showed the UK housing market going into reverse. The gauge reported that the prices fell by –28% in May from –21 in the previous month. Expect the pound to remain in current ranges should we see the inflation release coming out in line with expectations.

The euro remained under pressure against most of its major rivals on speculation EU finance ministers will struggle today to find the solution for Greek debt crisis. An agreement between the member states is the only constructive solution for Greece as the IMF (International Monetary Fund) can’t pay its share of a 12 billion euro in July unless the EU cover for the residual of 30 billion euro bailout plan. In addition, Standard & Poor’s rating agency yesterday lowered its long-term sovereign credit ratings on Greece to CCC, with negative outlook. Expect for the single currency to remain volatile against its major rivals for as long as EU delay the resolution on a bailout package for Greece.

Euro Drops On Greek Bailout Troubles

The pound is mixed this morning, gaining against the broadly weaker euro, but dropping against the dollar ahead of the inflation report scheduled for tomorrow. Sterling extended its last week’s decline versus the dollar as market participants expect Britain’s economic growth to be undermined this year and as the Bank of England is not expected to change its base rate from 0.5% in near future. There are no economic releases scheduled for today, but MPC member Martin Weale is due to give a speech in London at 7pm. Looking ahead to this week, consumer price data for May are released on Tuesday, with the expectations for the CPI inflation to remain unchanged at 4.5%. However, analysts believe that May inflation slowdown is just a temporary pause in an upward trend that could take CPI towards 5.5% later this year. On Wednesday, both the Chancellor of the Exchequer and the BoE Governor are due to give speeches at the Mansion House. The May RICS survey will also be published on Thursday, while Wednesday sees the release of labour market statistics for April and May.

The euro dropped against its major rivals during the overnight trade as European leaders struggle to find common ground on Greek bailout. ECB President Jean Claude Trichet and German Finance Minister Wolfgang Schaeuble are at the odds over whether banks and private investors should take loses on Greek public debt. The ECB President is scheduled to speak in London today. Looking ahead to this week, Eurozone inflation and industrial production headline the economic calendar, with the expectations for figures to consolidate slightly. Expect for the single currency to remain under pressure as Greek debt crises solution is far from conclusion.

The dollar gained across the board during the Asian session as investors run for safety of the US currency on Eurozone debt issues and on worries about the pace of global recovery. Looking ahead to this week, industrial production figures on Wednesday headline the economic calendar, with the expectations for the numbers to improve slightly from previous reading. Also scheduled for this week are the inflation figures, followed by Philadelphia Fed manufacturing surveys for May.   

Euro Drops On Inflation Concerns, Debt Crisis

The pound dropped across the board this morning after manufacturing output weakened more than expected in Aril, confirming that UK economic growth is evaporating. Factory output dropped by –1.7%, exceeding the economist forecast of a –0.1% contraction.  A separate report showed that prices at factory gates rose 0.2% in May, the least since September 2010. The Bank of England yesterday pledged to keep its benchmark interest rate at record low 0.5% confirming the speculation the rates will remain at this level until 2012 as government’s fiscal plan is weighing on recovery.

The euro consolidated against the dollar after the European Central Bank President, Jean Claude Trichet signaled interest rate increase in July and expressed his concerns about the pace of inflation. The ECB said inflation next year will accelerate between 1.1% and 2.3%, while policymakers see consolidation in Eurozone GDP within 0.6% to 2.8% ranges. The single currency also came under selling pressure as Mr. Trichet said the central bank is not in favor of restructuring any loses with regard to Greek bondholders and wants to avoid any credit event or default. Expect for the euro to remain in current ranges before Trichet speaks in Frankfurt today.

Pound Volatile Before BoE Meeting

The pound was little changed against the dollar during the overnight trade, but remained under pressure against the euro on speculation the Bank of England (BoE) will keep the interest rates at record low while the European Central Bank may signal the change in its base rate. The Bank of England has kept its main rate at a record low 0.5% since March 2009, and bought 200 billion pounds of bonds under a so-called quantitative easing program that ended in January 2010. The likelihood of a change in standing policy seems very small, with the central bank firm in its commitment to revitalize the economy as it digests the government’s austerity program. Some market participants speculate the BoE may keep interest rates unchanged until April 2012 after inflation reached record levels. Also scheduled for today is the trade balance report, with the expectations for the figures to decrease slightly in April.

The euro gained against most of its major rivals on speculation European Central Bank President Jean Claude Trichet will signal today a further rate hike in the near future. Although the ECB’s main refinancing rate is expected to remain unchanged at 1.25% traders believe the central bank will raise rates at their next meeting. Expect for the European single currency to remain supported as ECB officials remain determined to battle inflation.

Euro Consolidates Versus Dollar On Debt Crisis Concerns

The pound dropped against most of its major rivals this morning after Moody’s Investors Service said Britain could loose its Aaa rating if the government misses its fiscal targets and if UK growth remains weak. Sterling was also undermined during overnight session after BRC Shop Price Inflation decelerated in May at a slowest pace this year. The BRC gauge reported a fall in shop price inflation to 2.3% in May from 2.5% in April. British Retail Consortium (BRC) said that high commodity prices were pushing the prices up, particularly into food prices, but weak consumer demand was working in the other direction. There are no data releases or policy speeches scheduled for today. Expect for the pound to remain in current ranges ahead of the BoE interest rate announcement scheduled for tomorrow.  

The euro was mixed during the overnight trade, gaining against broadly weaker pound, but dropping against the dollar and yen after the International Monetary Fund (IMF) said its 26 billion euro package to Portugal “ entails important risks”. The IMF approved the loan to Portugal on May 20 as part of a joint 78 billion euro bailout with the EU in order to contain regions sovereign debt crisis. Looking ahead to today Eurozone Gross Domestic Product (GDP) and German Industrial Production figures headline the economic calendar, with the expectations for the first quarter GDP to remain unchanged at 0.8%. Expect for the euro to remain volatile ahead of the European Central Bank meeting scheduled for tomorrow.    

The dollar was higher against most of major rivals during the Asian session as global risk aversion pushed investors into the safety of the US currency. Looking ahead to today the Federal Reserve releases its Beige Book economic survey today. Also scheduled for today is the MBA Mortgage Applications. Expect for the dollar to remain in current levels against the euro and the pound as Fed officials remain dovish on their interest rates policy.

Pound Drops As Retail Sales Figures Tumbles

The pound dropped during the overnight trade after BRC sales reports showed that retail sales dropped unexpectedly in May. The BRC (British Retail Consortium) said sales at stores fell by -2.1% from a year earlier, compared with the 5.2% increase in April as accelerating inflation and government budget cuts are damping consumer confidence. Separately, Halifax House Prices report showed that UK house prices rose only by 0.1% in May, failing to bounce back from the April drop. There are no data releases or policy speeches scheduled for today. Major release for this week is the BoE’s interest rate announcement on Thursday and it is widely expected that central bank will keep its key interest rate unchanged at 0.5%.

The euro rose across the board after German Chancellor Angela Merkel told US President Barack Obama that euro region will overcome its debt crisis during after the leaders meet in Washington yesterday. The single currency was also supported after European Central Bank President Jean Claude Trichet encouraged investors to buy new Greek bonds to replace the maturing securities. Several economists believe that the ECB is considering a rollover of bonds as an alternative means of easing Greece’s funding squeeze. Looking ahead to today, Eurozone’s retail sales figures headline the economic calendar, with the expectations for the numbers to increase by 0.3% in April after dropping -1.0% in the previous reading.   

Pound Gains Versus Dollar After EEF Posts Positive Data

The pound is mixed this morning, consolidating against the broadly stronger euro, but gaining against the dollar after the EEF (Engineering Employers Federation) said factory production strengthened in the second quarter as companies benefited from increasing export orders. However, sterling dropped against the euro on speculation European Union will create additional aid package for debt stricken Greece. There are no data releases or policy speeches scheduled for today. Looking ahead to this week, interest rate announcement from the Bank of England headlines the economic calendar. It is widely expected that BoE officials will leave base interest rate unchanged at 0.5% given the pace of the economic recovery in the UK. First quarter GDP numbers failed to pick up from the 0.5% seen in the first estimate when revised data were published last month. Also weighting on the British currency was disappointing manufacturing and services sector PMI’s. Separately, scheduled for this week are the Trade Balance figures and second quarter NIESR (National Institute for Economic and Asocial Research) GDP estimate. 

The euro gained across the board during the early morning session on prospects EU officials will reiterate their intention to create new aid package for Greece, taking of the selling pressure from the single currency. Looking ahead to today Eurozone Producer Price Index figures headline the economic calendar, with the expectations for the report to show inflation accelerated in the single currency block. This will strengthen the case for the European Central Bank (ECB) officials to continue with its hawkish interest rate policy. Headline release from the Eurozone this week is the ECB interest rate announcement on Thursday, as the investors seek for the clarity on the central bank’s next move.

Pound Drops Before PMI Services Release

The pound consolidated during the overnight trade ahead of the PMI Services release scheduled for 9:30 this morning that may show services industry slowed in May. The gauge from Markit Economics Ltd. and the Chartered Institute of Purchasing and Supply is expected to drop to 54.2 from 54.3 in April. Sterling dived for a fourth day against the euro on speculation that weak economic growth will prevent Bank of England from raising interest rates in near future. The pound lost 3% of its value against the single currency this year as BoE officials struggle with signs of deteriorating economic growth and inflation that accelerated to 4.5% in April. The European Central Bank raised base interest rate to 1.25% in April regardless of the debt crisis in its peripheral member states and is expected to be the first one to raise its borrowing costs in near future. Looking ahead to today, US Nonfarm Payrolls release headlines the economic calendar, with the expectations for the figure to drop to 165K in May from 244K in the previous month.  

Pound Drops After Weak PMI Manufacturing

The pound remained under pressure during the overnight trade ahead of the PMI Construction release scheduled for today at 9:30. The construction index is expected to have picked up to 53.5 in May from 53.3 in the previous month. Sterling dropped yesterday after a manufacturing PMI fell to a 2 years low and after separate report showed UK mortgage approvals dropped the most in four months. Weak economic data raises the likelihood the Bank of England will keep interest rates on hold in order to support the economic recovery. In addition to today’s releases, Britain’s Debt Management office is due to auction 3.5 billion pounds of 3.75% bonds due in September 2021. Expect for the pound to remain in current ranges as investors remain doubtful about the pace of economic recovery.

The euro gained against most of its major rivals after German Chancellor Angela Merkel reiterated that Germany remains committed to the single currency and said the outlook for the German growth remains “very positive’. The euro was also supported before ECB President Jean Claude Trichet speaks in Germany today. Market participants speculate that he will remain hawkish on inflation and interest rate hikes after saying yesterday that the ECB “will continue to deliver price stability”.

The dollar was mixed this morning, gaining against the broadly weaker pound, but dropped against the euro on speculation the Eurozone will be raising its base interest rate in near future. Looking ahead to today, Factory Orders release headline the economic calendar, with the expectations for the figure to drop to –1.0% in April from 3.0% in the previous reading. Expect for the dollar to remain under selling pressure before Labor Department release May unemployment figures tomorrow.  

Pound Consolidates Before PMI Manufacturing Release

The pound consolidated across the board during the overnight trade ahead of the manufacturing PMI (Purchasing Managers Index) release scheduled for today at 9:30. Manufacturing gauge for May is expected to decrease to 54.1 from 54.6 in the previous month, adding more pressure on the pound as economic recovery continues to stall. Also scheduled for today are the money and credit data for April, with the expectations for the figures to improve slightly. And last but not the least is the mortgage approvals release, with the predictions for the April figure to fall to 47.0K from 47.6 in the previous month.

The dollar was under selling pressure during the overnight session as investors’ preferred Asian stocks, sapping “safe-haven” demand for the greenback. The dollar also dropped against the euro before the ADP Employment Change release scheduled for today, as report is likely to show that US companies hired fewer workers in May. Also scheduled for today is the ISM (Institute for Supply Management) manufacturing release, with the projections for the figure to drop to 57.1 in May from the 60.4 in the previous month. Expect for the greenback to remain under pressure before the US unemployment release scheduled for tomorrow.