Following poor inflation data yesterday morning, the pound started the day on the back foot. Data for CPI, core CPI and RPI all fell short of forecast, reducing any pressure on the Bank of England to raise interest rates. Following the data release, the pound dipped to around 1.1520 against the euro and 1.3040 against the US dollar. As Parliament is still on their Easter break, market data has been dictating the currency movements in lieu of any Brexit headlines.
The Bank of England has implied they are highly unlikely to move interest rates, regardless of inflation figures, until the Brexit process has been fully resolved. Under the latest extension deal with the EU, should an agreement be made prior to the 31st October deadline the UK could exit sooner. Many believe however it is unlikely a resolution can be agreed before the deadline. Talks will continue between the ruling Conservative party and the opposition Labour party to see if an agreement can be reached when Parliament returns after Easter.
In the markets today, UK retail sales received a boost. Previously released at 0.4% for March, April’s data was released at 1.1%. From the eurozone, flash manufacturing and services PMI’s were released. Both fell short of expectations with manufacturing released at 47.8 against a forecast of 48.1, while services achieved 52.5 against 53.1. From the US, this afternoon will see retails sales data and the Philly Fed Manufacturing index released at 13.30 BST, followed by a handful of minor releases up until 15.30 BST.