Sterling held steady after Thursday’s European open with limited market reaction to the weaker than expected GDP data. Bank of England chief economist Pill stated that high-frequency indicators suggest that momentum in wage developments appear to be easing. He added that the latest data is somewhat disappointing, but still much better than central bank forecasts from late last year. He warned that inflation may be bumpier than expected, but still expects a sharp reduction in the second quarter, primarily due to very favourable base comparisons.
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The Euro maintained a strong reading after Thursday’s European open and it continued to trade around a new level against a generally soft dollar. ECB council member Vasle stated that the central bank is considering a 25 or 50 basis-point rate hike for the May policy meeting.
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US initial jobless claims increased to 239,000 in the latest week from 228,000 previously which was above consensus forecasts of 232,000 and the second-highest reading of the year. Continuing claims declined slightly to 1.81mn from 1.82mn the previous week. Producer prices declined 0.5% for March compared with expectations of a small increase and the year-ion-year rate declined sharply to 2.7% from 4.9% previously. Core prices declined 0.1% with the annual rate slowing to 3.4% from 4.8% previously and this was the lowest reading since April 2021.
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