Investors will wait for UK inflation report due at 09:30 GMT, yet it will be preceded by important trade balance data at 08:30 GMT. Visible trade deficit is predicted to widen to 7500 billion pounds in March from the prior deficit of 6776 billion pounds. In the US, MBA mortgage applications data for May 6 is due at 11:00 GMT followed by trade balance which is expected to show a widened deficit of $47.0 billion in March from $45.8 billion deficit, whereas the monthly budget statement is due at 18:00 GMT.
The awaited quarterly inflation report is expected to have a significant effect on the pair as it will include the latest growth and inflation forecasts as well as the bank’s insight to the current situation.
Expectations are in favor of seeing a decline in the BoE’s growth forecasts in today’s report which would make the possibility of seeing a soon interest rate hike by the BoE very low.
Lat week’s data showed a drop in UK’s manufacturing, services and construction which raised concerns with regard the strength of recovery after the 0.5% expansion recorded in the first quarter. If the BoE lowered growth forecasts this would push the pair further to the downside and may worsen the outlook for the British economy, thereby the pair may have a downside direction, especially with the dollar’s rebound.
Originally posted here
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