The RICS survey indicated that prices in Britain’s residential property market climbed more than expected for April amid a shortfall in homes for sales, partly due to home owners putting off their selling plans until the end of the general election. Looking ahead, the economic calendar will be light for the rest of the week.

Across the Atlantic, market participants will note data on unemployment claims for the last week, scheduled later today, to gauge the strength of the labour market. The disappointing retail sales report in the US yesterday led to a broad weakness in the greenback.

Pound Sterling – UK Markets

Yesterday, the release of the BoE’s quarterly inflation report initially restrained Sterling’s rally against the US Dollar, after it suggested that the first interest rate rise could be expected in mid-2016 and that the rise in rates will be gradual. However, the Pound later edged higher as the US Dollar gave up gains, following the disappointing US retail sales report. The BOE revised its growth forecast for 2015 downwards to 2.5%, from the previous forecast of 2.9%, with the BoE Governor, Mark Carney signalling that growth in the UK economy will increasingly depend on productivity. He added that inflation is expected to pick up in the latter part of the year, as the effects of cheaper oil and grocery prices fade. Meanwhile, latest figures show that wages picked up at a higher than expected pace, reflecting the strength in the nation’s labour market.

The latest RICS survey revealed that Britain’s house prices for April rose at the fastest pace since August 2014, as many home sellers held back in the run up to the election. The Pound is trading range bound against its key peers this morning, amid no additional domestic indicators.

US Dollar – US Markets

The US Dollar lost ground against the Euro yesterday, as lackluster retail sales data weighed on investor sentiment, fuelling concerns about growth momentum in the world’s largest economy. The latest figures indicated that retail sales were barely up from the previous month, despite gains in employment. The weak report suggests that shoppers have held back on their purchases and focused on savings. Additionally, the core retail sales component, excluding the effects of oil prices and food items, hardly grew for April. Going forward, Friday’s Reuters/Michigan consumer sentiment index will provide a clearer picture of the spending outlook for consumers.

The US Dollar has continued to trade on a weaker footing against the Euro this morning. Later in the day, market participants will keep a tab on the weekly jobless claims and the US producer price index for further direction. Labour market data is expected to indicate that the number of new unemployment claims in the US increased, while producer prices are estimated to remain unchanged for April.

Euro – European Markets

Economic growth in the Euro zone picked up in the first quarter, supported by a rebound in economic activity in some major European economies. The preliminary GDP print showed that growth in the Euro area was boosted by stronger than expected expansion in France and Italy that made up for the slowdown witnessed in Germany. The publication seemed to indicate that the Euro region has benefitted from lower oil prices, weaker Euro and stimulus measures introduced by the ECB in the first quarter of this year. Meanwhile, yesterday’s data showed that the Greek economy slipped back into recession for the first quarter as it desperately tries to avoid a default on its debt. Additionally, Euro zone’s industrial production fell unexpectedly for March. In yesterday’s trading session, the Euro nudged higher against the US Dollar, following softer US economic releases.

Today, the Euro has moved above the 1.14 mark against the greenback. In the absence of any major economic release in the region during today’s trading session, market participants are expected to watch for other global cues to provide further direction.

Other Currencies – Highlights

The Kiwi Dollar rallied against the US Dollar in the early Asian trading session after New Zealand’s retail sales recorded its largest increase on record for the first three months of 2015. Core retail sales also recorded a robust rise. Retail sales surged as the start of the academic season saw an increase in demand for consumer electronics such as laptops and tablets. The strong sales numbers suggest increased confidence among consumers and a growing economy. The robust retail sales data and the strong labour market are likely to reduce prospects of an interest rate cut this year by the Reserve Bank of New Zealand (RBNZ). Next week’s RBNZ’s report on inflation expectations for the second quarter will likely provide more clarity about the direction of interest rates in the nation.

Currently, the New Zealand Dollar is trading on a stronger footing against the US Dollar. Later today, market participants will keep a tab on the US producer price index and weekly unemployment claims data, for further direction.