Pound and euro hold gains ahead of tomorrows key inflation data

Key Movers

Ahead of tomorrow’s eurozone inflation data, we have CPI from Spain and Germany being released today. Spain's rate of inflation has tumbled from 6% to 3.3% with Germany's reading due later. Germany releases its inflation data state by state and then an overall number is published at 1 pm. This is expected to drop from 9.3% to 7.5%. Tomorrow’s overall reading for the bloc as a whole is due to show CPI falling to its lowest level in a year (7.1%) however eyes be more focused on the core number which strips out the cost of food and fuel. This is predicted to rise a touch to 5.7% y/y. Policymakers at the European Central Bank and consumers alike will be hoping this actually sees a fall to help ease the consumer spending squeeze most major economies are experiencing at present. From the States, we have the final reading of GDP due at lunchtime with no change from the previous 2.7% y/y expected. We also have Unemployment Claims which are expected to show 196k people filed for unemployment insurance last week. Tomorrow's Personal Consumption Expenditure figures from the US could cause some market volatility. Last month’s unexpected rise led Federal Reserve Chairman, Jay Powell to warn policymakers in Washington that higher rates were needed to combat inflation which will have acted as a contributing factor to the banking turmoil seen in recent weeks. EUR/USD has been pretty stable over the past 24 hours with it currently around 1.0850. We could see some whipsawing tomorrow however depending on how the aforementioned inflation numbers print.