GBP/USD continues to lose ground this week. Currently, the pair is trading at 1.2647, down 0.45% on the day. The pound touched a low of 1.2641 earlier on Wednesday, its lowest level since early January. On the release front, British CPI jumped to 2.1% in April, up from 1.9% in March. Still, this missed the estimate of 2.2%. The U.K. deficit jumped to GBP 5.0 billion, shy of the estimate of GBP 5.2 billion. This marked a 5-month high. Today’s highlight is the minutes of the Federal Reserve’s policy meeting earlier in May. On Thursday, the U.S. releases unemployment claims.
Prime Minister May will try (yet again) to push a withdrawal agreement through parliament in early June. The first three attempts were shot down by lawmakers, and it’s doubtful if the fourth attempt will be successful. May has said that this deal will include a compromise on the customs union issue, but Labor and many Conservative MPs have dismissed May’s proposal. May’s days in the prime minister chair may be numbered, as she desperately tries to prevent the U.K. from crashing out of the EU without a deal in place.
At the May policy meeting, the Federal Reserve maintained the benchmark rate for a fourth straight month. The rate statement noted that inflation pressures remain muted and that the FOMC would remain patient regarding future rate movements. Jerome Powell reinforced this stance after the meeting, saying that “we don’t see a strong case for moving in either direction”. Will the minutes point to any bias regarding the next rate move? The Fed is already on record as saying it does not expect to raise rates before 2020, and with inflation levels persistently below the Fed’s target of 2.0%, the Fed can afford to continue its wait-and-see stance.