Investors attention will turn to US economic data figures as there is no UK or EU data to be released today.
In the States, the key releases today are housing starts, unemployment claims and industrial production. The total number of new residential buildings that began construction is set to show an expansion in April to 1.42 million.
Pound Sterling has rallied against the Dollar after the US CPI inflation reading yesterday. Annual core inflation slowed to 3.6 percent in April (from 3.8% in March) and general inflation dropped to 3.4 percent (from 3.5% in March).
This data suggests that inflation is heading towards the Fed’s target rate of 2 percent and has almost cancelled out the opportunity of raising interest rates. We have a number of Fed speakers this afternoon so their comments will be closely watched.
Jerome Powell has recently highlighted he expects the Fed to begin interest rate cuts in September, however the softer-than expected US inflation data has increased expectations for earlier rate cuts.
In the Eurozone, GDP rebounded in the first quarter of 2024 and showed an expansion of 0.3 percent from Q4 2023. This release is positive for the EU as it shows economic strength and indicates that consumer spending is on the rise.