- The single currency slumped further against the US dollar yesterday following Fridays above print US labor market report as investors mull over weekend European Parliamentary results and a French snap election. The dollar index rose for a third day to its highest level in over a month as EURUSD slipped as low as 1.0733 before recovering. The pair is likely to consolidate around 1.0750 as the market prepares for tomorrow’s US CPI release and FOMC interest rate decision.
- Data released this morning showed that UK unemployment rose unexpectedly to the highest level in over two and a half years with wages held at a stubbornly elevated level. Rate setters on the MPC will likely be disappointed with the data and the news will further complicate their decision of when to start cutting interest rates. Unemployment rose to 4.4% in the three months through April which is the most since the middle of 2021 as average earnings grew 5.9%, consistent with the previous print but higher than the markets expectation of 5.7%. The data will be a further blow to the BoE who continue to face sticky inflation and are expected to keep interest rates on hold when they next meet on 20 June. The pound dipped a touch on the news with GBPUSD remaining in the doldrums post NFP and trading close to the psychological support area at 1.27. EURGBP remains offered after finally breaking support at 0.8490, dropping the pair to its lowest level in two years.
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