Sterling Targets Month Highs Versus Euro & Dollar

Pound helped by undershoot in US data as GBP/USD targets $1.27

Sterling is continuing to press the Euro this morning and is targeting the €1.17 handle. Elsewhere, the Pound rallied against the Dollar after a key U.S. inflation print undershot expectations and retail sales showed a notable retracement in spending during April. The Pound to Dollar exchange rate jumped to $1.2645 and could be on route back to $1.27 after official data showed U.S. CPI inflation rose 0.3% month-on-month in April, down on March (0.4%) and below expectations (0.4%). After three months of uncomfortably hot upside surprises, the softer-than-expected reading will renew hopes that the rise in inflation in the first three months of the year was a counter-trend blip.

Data 11.00: CBI Industrial Order expectations expected -20 from -23.

EUR: Stuck in a range

EUR/USD appears stuck in a rather small trading range, as some recovery in the Dollar was primarily driven by the underperforming AUD, NZD and JPY yesterday, while the likes of EUR, CAD and NOK held stable. We are not expecting major swings today as the data calendars in the Eurozone and US are light. A speech by European Central Bank President Christine Lagarde today at an event in honour of Janet Yellen may not touch on monetary policy at all.

Speaker 09.00: ECB President Lagarde.?

Dollar steady

The Dollar was firm this morning while the Yen struggled on the weaker side of the 156 level, though trade was mostly rangebound as investors generally stuck to their views of the expected timing and extent of Federal Reserve rate cuts this year. With little on the U.S. economic data calendar this week to guide the direction of currency moves, investors' focus is turning to a slew of Fed speakers for clues on the U.S. rate outlook and how soon an easing cycle could begin. Several officials on Monday called for continued policy caution, even after data last week showed a welcome easing in consumer price pressures in April.

No Major Data. Speakers: 09.00: Treasury Sec Yellen. 14.00: FOMC Member Waller.