EUROPEAN session review: Pound under pressure

Data released: 

06:00 GMT Germany Harmonised Index of Consumer Prices (YoY) (Apr) 1.1% 1.1% 0.9% 

06:00 GMT Germany Consumer Price Index (MoM) (Apr) -0.2% -0.2% 0.3% 

06:00 GMT Germany Consumer Price Index (YoY) (Apr) 1.3% 1.3% 1.0% 

06:00 GMT Germany Harmonised Index of Consumer Prices (MoM) (Apr) -0.3% -0.3% 0.3% 

08:30 GMT UK ILO Unemployment Rate (3M) (Mar) 6.8% 6.8% 6.9% 

08:30 GMT UK Average Earnings excluding Bonus (3Mo/Yr) (Mar) 1.3% 1.5% 1.4% 

08:30 GMT UK Average Earnings including Bonus (3Mo/Yr) (Mar) 1.7% 2.1% 1.7% 

08:30 GMT UK Claimant Count Change (Apr) -25.1K -30.0K -30.6K 

08:30 GMT UK Claimant Count Rate (Mar) 3.3% _ 3.4% 

09:00 GMT EMU Industrial Production w.d.a. (YoY) (Mar) -0.1% 1.0% 1.7% 

09:00 GMT EMU Industrial Production s.a. (MoM) (Mar) -0.3% -0.3% 0.2% 

09:30 GMT Bank of England Quarterly Inflation Report 

The pound was in focus during european trade. Market participants expected a more marked 'hawkish' shift, perhaps in response to evidence of labour market tightening, will be disappointed. 

The MPC's forecasts and the general tone of the Report suggest the BoE is minded to proceed cautiously and is reluctant to give any indication that it is minded to withdraw monetary policy stimulus in any pre-emptive fashion. 

EURO 

According to data released today, German annual inflation rose 1.3% in April, following 1% growth registered the previous month. This result is in line with analysts' forecasts. On a monthly basis German CPI fell 0.2%, after rising 0.3%, as expected. 

Year-over-year German HICP grew 1.1% in April, up from 0.9% in March. On a monthly basis HICP declined 0.3%, following a 0.3% increase. 

EUR/USD consolidates above yesterday’s lows on $1.3690. Initial resistance comes at $1.3800 (23.6% Fibo of the recent fall), then - at $1.3840 (38.2%) and $1.3870 (50%). Below $1.3700 support comes at $1.3670 (Apr 4 lows). 

POUND 

The sterling fell after labour market data in the British economy disappointed investors: the unemployment measured by the Claimant Count Change dropped by 25.1K in April, missing estimates for 30.0K and up from March’s 30.6K (revised,) while the jobless rate ticked lower to 6.8% in line with consensus and coming from 6.9% in the previous reading. 

BoE’s Quarterly Inflation Report added to pressure on the pound. 

GBP/USD fell to $1.6770. Below support comes at $1.6780 with a break under widens losses to $1.6700 and around Apr 15 lows on $1.6660. 

YEN 

Dollar fell versus the yen ahead of the US data due to come later and ahead of Japan GDP figures. 

USD/JPY holds below Y102.00. The downward momentum dissipated quickly as USD recovered strongly to reach a high of Y102.36 yesterday. This level is just below the key resistant for the bearish view at Y102.40. As long as this level is intact, we are not ruling out a return towards the low of Y101.40/45. 

DATA AHEAD 

Later, at 14:30 GMT EIA Crude Oil Stocks change data come. 

At 23:50 GMT preliminary Q1 GDP data due to come.

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