Yesterday, Federal Reserve Vice Chairman Richard Clarida noted that April’s CPI figure which showed inflation rose to 4.2% was “a very unpleasant surprise”. Nevertheless, the Fed’s stubbornly dovish tone regarding inflation being transitory has caused a slight shift in momentum for USD, putting the dollar back on the front foot, causing GBPUSD to push again in to the lower bounds of the 1.41 range.
However, the current upbeat economic outlook for the UK following the pandemic and the success of the UK vaccination programme appears to be supporting GBPUSD at 1.41. The focus will now shift to key data releases later on in the week with US GDP QoQ due tomorrow.
A similar tone was echoed by the ECB Governing Council member Villeroy who said yesterday that the ECB can accept inflation above 2% for some time. The comment itself did not drive price action too much, but signals wider central bank inflation tolerance with now the FED, ECB and BoE making similar remarks.
Outside of the previously mentioned US GDP data, there is not too much in due this week in the way of key data.
Have a great day.
Author: Chris Allan, Senior Relationship Manager
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