The US dollar fell short yesterday losing around 0.3% against the euro – which remains close to a five-week high against the dollar – and 0.3% against the pound, as investors anticipated the release of the upcoming UK jobs report.
This morning, the Office for National Statistics revealed the UK unemployment rate rose to 4.3% which is slightly higher than the previous month and expectations of 4.2%. Meanwhile, the number of employed individuals fell by 177,000 in the three months to March. This was less than market forecasts of a 215,000 decrease.
The German inflation rate remained unchanged at 2.2% in April, in line with market forecasts.
Yesterday, MP and former business secretary Jacob Rees-Mogg criticised the Bank of England for its inability to reduce inflation more quickly. He said, “Its miserable incompetence allowed inflation to peak at almost six times its target rate and now it is demanding higher taxes because of its hopeless bond trading strategy.”
Many Conservatives have criticised the Bank for not raising interest rates sooner, which has resulted in policymakers keeping rates higher for longer than in neighbouring countries. The Bank decided last week to hold the base rate at 5.25%, still miles off its 2% target.
In Portugal, the annual inflation rate expanded by 2.2% in April, easing from 2.3% in March and in line with preliminary estimates.
Later this morning we will receive an indication of German and euro area economic sentiment courtesy of the Centre for Centre for European Economic Research (ZEW). The most recent German reading of 42.9 in April was the highest since February 2022 and markets forecast a slight decline in May.
US PPI figures are also expected this afternoon which will be followed by a couple of speeches from the Federal Reserve, including chairman Jerome Powell.
Tomorrow morning, the spotlight will be on labour data and GDP growth rate figures for the euro area, followed by US inflation in the early afternoon.
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