Currency Note

UK inflation data due this week

By Alex Bennett May 16th, 2022

After strengthening towards the end of last week, the pound is still strong against the euro this morning ahead of a busy week for economic data releases.

The most notable release of the week is UK inflation data, which is due on Wednesday. Inflation is expected to have risen to 8.9% year-on-year in April from March’s reading of 7%. Any surprise figures could impact the pound.

European inflation figures will also be released on Wednesday, expected to show a slight uplift in April. As well as this, the euro could continue to be impacted by any further news of Russian sanctions on European energy companies.

Data released this morning reveals that COVID-19 lockdowns in China have impacted economic growth, and this adds to concerns about the state of the global economy. The dollar has benefitted from its safe-haven status on this news and has strengthened.

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GBP: A busy week for economic data releases

The pound strengthened against the euro at the end of last week and is trading around the same levels this morning. It is weaker against the dollar.

This comes ahead of a busy week in the economic data calendar. Unemployment figures will be released for the UK tomorrow, followed by inflation data on Wednesday. UK inflation is expected to have risen to 8.9% in April, a jump from March’s reading of 7%. The week will finish with retail figures on Friday.

These data releases could have a bearing on the pound’s movements, especially if there are any surprises. Today, the Bank of England’s Monetary Policy Report Hearings will take place, where we will be reminded of the Bank of England’s plan for interest rates.

GBP/USD chart over past year

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EUR: Inflation figures due on Wednesday

The euro weakened at the end of last week after Russia announced it was sanctioning several European energy companies. It is still weaker against the dollar and the pound this morning.

It’s also a busy week ahead for European data releases. GDP figures will be released tomorrow for the first quarter of this year, expected to come in at 5% year-on-year, which is a slight improvement on 4.7% seen in the last quarter of 2021.

Final inflation figures for April will be released on Wednesday, expected to come in at 7.5%, a small uplift from March’s reading of 7.4%. President of the European Central Bank, Christine Lagarde, is due to speak ahead of this on Tuesday.

Later today, the European Commission will publish its spring forecasts for economic growth.

USD: Fed officials to speak this week

The dollar is strong against a basket of currencies this morning, benefitting from is status as a safe-haven currency.

Worries over high inflation, the economic impact of the war in Ukraine and concerns over news that the Chinese economy is struggling due Covid restrictions.

There will be a series of speeches from Federal Reserve officials this week, including Fed Chair, Jerome Powell. The markets will be listening closely for any comments surrounding high inflation and the future plan for interest rates.

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