Thursday May 15th 2008
Good morning.
Sterling remains under pressure
This British pound hit a 2.5 month intra-day low against the US dollar yesterday following the release of the UK employment rate and the Bank of England Quarterly Inflation Report.
Bank of England Inflation reported that near-term inflation has deteriorated markedly over the past three months. CPI inflation was 3% in April and it seems this figure will remain high due to rising costs of Import pricing and energy costs resulting in a slow down of consumer spending. It looks as though Governor Mervyn King will be writing a few letters to the Chancellor until the end of the year when the target rate should settle around 2%.
The number of Britons claiming jobless benefits rose for the third straight month in April; official data showed on Wednesday, suggesting a slowing economy is starting to hit the job market. The claimant count rose 7,200 in April to 806,300, the third consecutive monthly rise and the biggest increase since April 2006. This report saw the British pound hit a 2.5 month intra-day low against the US dollar
This morning we had German GDP coming in 1.5%, the strongest growth since 1996 which should keep Euro and GBP well bid until ECB monthly bulletin.
US CPI came in just lower than expected at 0.2% in April apposed to the 0.3% Wall Street were expecting.
This saw the US dollar extend its gains against every major currency.
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