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Sterling just below 1.41 on the Dollar

Sterling just below 1.41 on the Dollar

GBP

Due to an empty data calendar Sterling moves were influenced by global developments on Friday. There was some caution over the spread of the Indian coronavirus variant in the UK which raised speculation of a delay to the re-opening of the UK economy in June. Inevitably the Boris Johnson press conference, scheduled for after the market closed generated further caution. 

The Pound crept above 1.4100 against a weaker US Dollar and the Euro held the Pound below 1.1630. Futures market data revealed an increase in bets on Sterling rising which maintains the risk of a correction if confidence dips.The Indian covid variant continued to cast a spectre over the weekend, but news that vaccines were still seen as effective did give some relief.

This morning risk conditions are a little weaker but housing data printed strongly. Sterling opened just below 1.4100 to the Dollar and the Euro is holding just below 1.1625 as markets focus on coronavirus variants.

 

USD

Headline US retail sales were unchanged for April, below expectations of a 1.0% increase, but the March surge was revised higher to 10.7% from the original reading of 9.7%. Underlying sales declined 0.8% on the month compared with expectations of a 0.7% gain and following a 9.0% gain previously.

The control group recorded a 1.5% decline following a 7.6% gain the previous month. The dollar was unable to gain any significant support from the retail sales data with fresh doubts following underlying demand conditions following the much weaker than expected employment report released earlier in May.

The University of Michigan consumer confidence index declined to 82.8 for May from 88.3 previously and below consensus forecasts of 90.0 with a decline in the current conditions and expectations components. There was a surge in the 1-year inflation expectations index to 4.6% from 3.4% previously with the 5-year rate at 3.1% from 2.7% and inflation developments will remain a crucial market factor in the short term.

Cleveland Federal Reserve (Fed) President Mester stated that the central bank is really focussed on inflation expectations at present. She saw inflation at 2% this year and heading lower again next year.  

 

EUR

The Euro is currently picking up bids against the Dollar and heading towards previous daily highs around the 1.2150 as we begin Monday’s trading session. In doing so, the currency major pair consolidates gains earned during the previous two-day run-up amid the US Dollar’s corrective pullback.

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