USD

The dollar rallied on Wednesday and held near a two-decade high after US inflation moderated less than markers had expected, keeping the Federal Reserve on course to tighten policy aggressively.

The Consumer Price Index climbed 8.3% on an annual basis in April, easing from 8.5% in March but outstripping the 8.1% estimate from economists. The data suggested inflation may have peaked, but was unlikely to cool quickly. As a result, the Fed sees its current monetary policy plans being derailed. The market has fully priced in, at least, a half percentage point increase to the policy rate at each of the next two Fed’s decision meetings, on June 15 and July 27.

GBP

The pound rebounded on Wednesday against the US dollar but it’s rally was short lived. Despite global markets falling in the wake of the US inflation data, analysts predict any gains for Sterling will be temporary as market conditions still favour the safe-haven dollar.

Key announcements

7:00 – GBP – Prelim GDP – Actual 0.8% from previous 1.3%
7:00 – GBP – GDP M/M – Actual -0.1% from previous 0.1%
13:30 – USD – Unemployment claims – Forecast 190k from previous 200k
13:30 – USD – PPI M/M – Forecast at 0.5% from previous 1.4%
13:30 – USD – Core PPI M/M – Forecast at 0.6% from previous 1%