Key European and US inflation data to be released

Despite the complete lack of data released out of the United Kingdom yesterday, the pound was able to push higher against both its major counterparts. Market movements can be put down to releases from within the bloc and across the pond, as well as speculative traders triggering key levels that were tested and broken. Against the Greenback, the pound traded in a 130pip range with highs of 1.4940(IB) and lows of 1.4811(IB). Yesterday was the fourth consecutive day the pound recorded a gain against the dollar after recovering from a 5-year low of 1.4569(IB) last Friday. Considering some of the larger bank's forecasts for the pound to continue to lose ground against the dollar throughout the year, these could be key levels to think about off-loading sterling and buying the dollar, especially when considering the strong resistance level at 1.5001(IB). Against the struggling shared currency, the pound was able to record a gain. Although fresh highs were posted at 1.3958(IB), the rate retreated from these levels and back towards the 1.39(IB) handle. Today brings a plethora of medium tier data released out of the United Kingdom with claimant count rate and change for the month of March, averaging earnings (including and excluding bonus), and the ILO unemployment rate. Strong readings could see the pound push higher towards the 1.40(IB) level against the euro and 1.50(IB) against the dollar. At the same time, a disappointing reading could see the pound give up some of its recent gains.

As mentioned earlier in the report, the euro did lose further ground against the pound. Although the euro did claw back some of its losses, new highs were posted and the pair could be gaining momentum to continue to push higher and test 1.40(IB). Against the dollar, the euro excelled; having posted daily lows of 1.0623(IB) the rate was able to push higher and break above the 1.07(IB) levels. This spike can be put down to strong global trade balance figures released in Italy which surprised the market. This, combined with weak readings in the States, aided the euro’s correction. Despite the recent correction, some analysts are still calling parity by the end of the year. This morning brings top tier data in the form of consumer price index, both month-on-month and year-on-year readings. A negative score will no doubt cause further damage to the euro and we could see the bearish trends of late continue

As mentioned earlier in the report, the dollar gave up recent gains against the pound, recording a daily loss of 0.5%. It was a similar story against the shared currency, recording daily losses of just shy of 0.6%. We witnessed negative housing data in the form of housing starts and building permits, both month-on-month figures for the month of March. Both readings falling considerably short of the consensus. Both continuing and initial jobless claims figures were released with a mixed bag of results; we saw a bullish continuing jobless claims reading - this, however, was counteracted by bearish initial jobless claims figures. Philadelphia Fed manufacturing survey scores were released and surpassed the 6.0 consensus with an impressive 7.5 reading. Today’s economic calendar brings key inflation data which will give market participants a better understanding of when an interest rate hike could occur. A strong reading should see some of yesterday’s losses reversed. As the week comes to an end, there is one more piece of top tier data released: Reuters/Michigan consumer sentiment index. With a previous reading of 93 and a consensus reading of 94, any score above this level could see the dollar end the week on the front foot.