GBP

The UK unemployment rate came in at 6.8%, so it is continuing to fall with
unemployment at 6.9% the previous quarter which is the lowest level in five
years. The number of people in employment hit a new record high with 30.43
million people now in work.

Also the focus was on earnings figures which largely disappointed. Average
earnings (excluding bonuses) rose by 1.3% during the quarter, which is
significant because it is again back below the inflation rate 1.6%. So real

GBP

The UK unemployment rate came in at 6.8%, so it is continuing to fall with
unemployment at 6.9% the previous quarter which is the lowest level in five
years. The number of people in employment hit a new record high with 30.43
million people now in work.

Also the focus was on earnings figures which largely disappointed. Average
earnings (excluding bonuses) rose by 1.3% during the quarter, which is
significant because it is again back below the inflation rate 1.6%. So real
wages are decreasing again, in comparison to the previous quarters data which
showed average wages outstripping inflation for the first time since the
financial crisis.

We also had Mark Carney’s quarterly inflation report. His tone was to stress
that the economy is improving, however, that there is still some way to go and
they are still in the early stages of the recovery. Some important things to
note from the speech were that the Bank of England has increased its Economic
growth forecast for next year from 2.7% to 2.9% and for this year unchanged at
3.4%.

Unemployment remains significantly above the banks current estimate for
equilibrium rate. The closest Carney came to indicating an interest rate rise
was by saying we have edged close to the point when the bank rate would
gradually need to rise.

EUR

Early in the morning the pound has just hit its highest level against the euro
in 16 months, the move was partly driven by a Reuters report, claiming European
Central Bank staff are preparing a “package of measures” for next
month’s meeting.This includes interest rate cuts and imposing negative interest
rates on bank deposits at the ECB.

Later on in the day Industrial production showed a contraction of 0.1%, this is
in comparison to growth of 1.7% for the previous year on year figures.

This data underscores the fragility of the European recovery and is another
factor that may force the ECB to act at their next meeting.

Today

This morning German GDP for Q1 came in above expectations at 0.8%. However GDP
figures from France and the Netherlands disappointed and the Euro weakened off.

The focus is on inflation data for both Europe and the USA today. The figures
will be particularly important for the Eurozone due to Draghis comments last
week that the ECB is ready to take action if inflation continues to fall. The
figures are expected to show a fall from 0.9% in March to 0.2% in April.

In America, inflation is forecast to tick up slightly, increasing from 1.5% to
2% year on year.

Key Announcements:
 
10:00 – EUR – April Consumer Price Index expected to decrease to 0.2%

13:30 – USD – Consumer Price Index expected to increase slightly in April to
0.3%

13:30 – USD – Initial Jobless Claims expected to remain unchanged at 319,000