There were again no significant domestic Sterling drivers during Thursday with risk conditions and global currency moves tending to dominate. US equities were able to make significant headway which helped underpin risk appetite, although the FTSE 100 index traded lower on the day. The Lloyds business barometer index edged higher to an 11-month high for April and Sterling overall held steady on Friday with strong expectations of a May Bank of England rate hike
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Euro-Zone industrial sentiment declined to -2.6 for April from -0.5 previously, but there was a recovery in the services sector for the month. The overall business and consumer survey increased marginally to 99.3 from 99.2 previously, but slightly lower than market expectations of 99.9. The Euro was unable to make any headway into the US open with narrow ranges prevailing as markets monitored risk conditions.
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The US GDP increased at an annualised rate of 1.1% for the first quarter of 2023 from 2.6% previously and below consensus forecasts of 2.0%. There was a strong increase in consumers spending of 3.7% from 1.0% previously, but this was offset by a dip in housing investment and a sharp decline in inventories for the quarter. The PCE prices index increased 4.2% from 3.7% previously while the core PCE prices index increased to 4.9% from 4.4% and above expectations of 4.7%. Although the headline reading was weaker than expected, the robust increase in consumer sending provided support and the stronger than expected inflation reading reinforced expectations that the Federal Reserve would increase interest rates next month.
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