GBP’s momentum against the USD and EUR has slowdown since inflation levels for the UK were released last week. We can now see that inflation is still growing in the service sector rather than on goods, meaning that inflation is forced more ‘domestically’, in other words on households. Policy makers mention that this type of inflation elevation is easier to control.
Leading to market speculation that BoE will be pushed to quantitative easing. Because of the upcoming UK election next week, there is no statements from BoE officials right now and therefor we can see signs of overreactions on markets from data releases.
Main releases today, is from the Canada and the US. Core inflation and inflation levels being released from Canada and forecasts suggesting that the inflation rate is to fall from 2.7% to 2.6%. BoC (Bank of Canada) recently lowered interest rates, so any surprises could cause volatility to CAD-pairs.
Later in the afternoon US announce their consumer confidence for June, expected to slightly pull back from May. Recent developments from job markets, seeing more US citizens applying for benefits could suggest that consumer confidence is on a down turn. The Federal Reserve has been clear with their forward guidance on interest rates decisions with September being the meeting for a first quantitative easing to occur.
