The end of the week brings a bundle of economic releases in the US with inflation readings. With both inflation rate and CPI (consumer price index) being released, markets might be bracing for a large jump. With energy and oil prices being pushed to higher levels recently its no surprise that inflation levels are forecasted to increase. As its stands, forecasting for this afternoon suggest a jump in inflation rates levels from 2.4% in its previous month to 3.3% as forecasted. Its if we see data exceeding forecasts even more that it could this be an early sign of inflation levels moving out of their comfort zone and potential shift markets views of monetary actions required from the Federal Reserve later on in the year. With the change of leadership fo the Federal Reserve coming up soon, don’t expect comments from the central bank until the change has taken place.
On top of this we will continue to follow the situation in the Middle East, which throughout the week has caused USD weakness to both the EUR and GBP. A large reason for this is the cease fire actions has seen liquidity leaving safe haven currencies like the USD and backed other commodity linked currencies like AUD, NOK and NZD.
GBP/EUR 1.1475 GBP/USD 1.3414 GBP/AED 4.9304
GBP/AUD 1.8994 GBP/CHF 1.0589 GBP/CAD 1.8564
GBP/NZD 2.2969 EUR/USD 1.1678 GBP/ZAR 22.0850