GBP

The pound strengthened for a fourth day against the
dollar, approaching a four-year high, as investors added to bets on faster U.K.
economic growth.

U.K. gross domestic product rose in the first quarter at
a slower pace than analysts expected reaching 0.8% up from 0.7% however
expectations were anticipating growth to reach 0.9%.

The year-on-year growth rate was 3.1%, the fastest in six
years, but again below forecasts for 3.2% growth.

GBP

The pound strengthened for a fourth day against the
dollar, approaching a four-year high, as investors added to bets on faster U.K.
economic growth.

U.K. gross domestic product rose in the first quarter at
a slower pace than analysts expected reaching 0.8% up from 0.7% however
expectations were anticipating growth to reach 0.9%.

The year-on-year growth rate was 3.1%, the fastest in six
years, but again below forecasts for 3.2% growth.

The economy is still smaller than it was before the
recession in 2008 but analysts expect the UK to be where it should be by mid-2014

EUR

German inflation increased less than economists forecast
in April, adding pressure on the European Central Bank to add stimulus within
areas using the euro.

The data deeply disappointed markets causing the euro to
weaken against both the US dollar and against the pound.

The overriding theme in the Eurozone continues to be whether
Mario Draghi and the ECB take any stimulus action to combat deflationary
pressures.

Today

This morning data from the Eurozone has been fairly mixed.
German unemployment remained at 6.7%; Italian inflation didn’t fall as much as
expected but Eurozone inflation failed to rise as much as analysts were
expecting.

Expectations were for a rise to 0.8% but the data came in at
0.7%. The euro dipped initially off the data as it adds to the argument the
Europe risks sinking into a deflationary slump – and thus might cause the ECB
to take action to stimulate the economy.

Key Announcements:

13.15pm – USD – ADP Employment Change (Apr): Expected to
rise to 210,000.

13.30pm – USD – Gross Domestic Product (Q1): Expected to
fall to 1.2%.

19.00pm – USD – Fed Monetary Policy Decision.