GBP
The Pound rose to its highest level against the USD dollar since August
2009 early yesterday morning but then retreated shortly after hitting 5 year
highs.

The move higher follows last week’s warning from Bank of England governor Mark
Carney that borrowing costs could rise sooner than the markets had expected and
it is possible that the official cash rate could rise before the end of the
year.
 

 GBP
The Pound rose to its highest level against the USD dollar since August
2009 early yesterday morning but then retreated shortly after hitting 5 year
highs.

The move higher follows last week’s warning from Bank of England governor Mark
Carney that borrowing costs could rise sooner than the markets had expected and
it is possible that the official cash rate could rise before the end of the
year.
 
EUR
Yesterday Eurozone inflation came in at 0.5% in May as the cost of
telecommunications and food kept prices low as the Eurozone slipped deeper into
a low-inflation hole in May. Eurostat reports that prices rose by just 0.5%
across the euro region last month, in line with its initial estimate.

Four European Union countries were in deflation territory, while another two
saw unchanged prices compared to a year ago.  Only Luxembourg, Austria,
Slovenia and Finland had an annual inflation rate of 1% or more.
 
USD
Experts have warned that growing geopolitical risk in Iraq and the Ukraine
could send oil and gas prices up sharply, that could lead to a correction in
the equities markets and a move away from riskier assets. If tensions escalate
further we could see flight to the safe havens of the US dollar and the
Japanese Yen.

The International Monetary Fund has cut its forecast for growth in the United
States this year after harsh winter weather hit the world’s largest economy in
the early months of 2014.The downgrade comes in the IMF’s latest update on the
US economy, which also highlights stubbornly high poverty rates, high long-term
unemployment and stagnant wage growth

The IMF now believes GDP in the US will grow just 2% this year, only a fraction
faster than 1.9% growth in 2013. It had previously forecast growth of 2.8% for
this year back in April

U.S. factories boosted production in May as the nation’s industrial output
increased for the third time in four months, a sign that growth in the critical
manufacturing sector is back on track following a harsh winter

Industrial production rose a seasonally adjusted 0.6% from April, the Federal
Reserve said on Monday. Capacity utilization, a closely watched gauge of slack
in the economy,  moved up 0.2 percentage point to 79.1% in May
 
Today
Inflation is the main theme of the day with UK inflation for May expected to
decline to 1.7% from a 2% increase in April. Later on in the Afternoon US
inflation is expected to remain steady at 2% for the month of May. We also have
ZEW Economic sentiment reports from Germany and the Eurozone.
 
Key Announcements:
09:30 – GBP- Core Consumer price index (May) fall from 2% to 1.7%
10:00 – EUR- German ZEW Economic sentiment Survey higher at 35.00
10:00 – EUR – Eurozone Economic Sentiment Survey
13:30 – USD-  US Consumer Price Index (May) expected to remain unchanged at
2%

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