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The Bank of England meeting, industrial and manufacturing production numbers and fresh inflation forecasts from the central bank are no doubt going to keep the British pound busy today. With prices hovering around the 1.2900 handle and nearly two days of doji candlesticks near the top end of the rally, the markets will be looking to the Bank of England for clues on monetary policy.

Yesterday, traders turned their attention to the Reserve Bank of New Zealand which kept the overnight cash rate steady, but the central bank delivered a 'dovish surprise' dismissing the recent uptick in inflation. This sent the kiwi dollar falling sharply as the markets were caught off guard by the dovish tone from the central bank.

Besides the BoE meeting and the events from the UK today, the U.S. producer price index data and the weekly unemployment claims numbers will be coming out.

EURUSD intraday analysis

EURUSD (1.0871): The pace of declines in the EURUSD slowed yesterday as the price fell to 1.0863 - 1.0854 region which saw a lot of consolidation take place a few weeks back in late April. We could, therefore, expect to see this price level hold out once again which could result in some upside momentum in the EURUSD.

Upside targets at 1.0900 - 1.09250 are some of the levels where we can expect to see the current reversal stall. On the 4-hour chart, there is a doji candlestick that was formed near the support zone of 1.0863 - 1.0854 which validates this view as the Stochastics are looking to push higher from the oversold levels currently. The bearish bias changes in the event that EURUSD breaks out higher above 1.0950.

GBPUSD intraday analysis

GBPUSD (1.2940): The British pound closed another day near the highs with the candlestick pattern forming a pin bar at the top. The nearest price level of 1.3000 cannot be ruled out as GBPUSD could be seen testing this level.

However, the overall bias remains to the downside with 1.2800 and 1.2600 as the possible downside targets. On the 4-hour chart, the rising wedge was re-drawn to adjust to the new price action, which continues to point to the downside, unless this pattern is invalidated. To the downside, the near term support at 1.2900 will be critical, and a break down below this level signals a continuation towards 1.2600 eventually.

USDJPY intraday analysis

USDJPY (114.25): The Japanese yen continues to weaken with USDJPY now into four consecutive days of gains with prices lifting off the 112.50 handle. To the upside, 115.00 remains the next likely target but the note that the daily Stochastics is very overbought which could signal the risk of a pullback in price unless the bullish momentum is maintained.

On the 4-hour chart, the nearest support is seen at 112.87 which could be tested if price fails to holds above the 113.78 handle. A decline to 112.87 will mark a correction in USDJPY ahead of further gains towards 115.00. While the U.S. economic data is soft today, the PPI numbers could trigger some movement in USDJPY.

USD/JPY - 114.13

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 114.22

Kijun-Sen level                  : 114.03

Ichimoku cloud top             : 113.82

Ichimoku cloud bottom      : 113.36

Original strategy  :

Buy at 113.25, Target: 114.45, Stop: 112.90

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 113.40, Target: 114.45, Stop: 113.05

Position :  -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after this week’s rally, suggesting recent upmove is still in progress and may extend further gain to 114.50-55 (100% projection of 108.13-111.78 measuring from 110.87), however, near term overbought condition should limit upside to 114.75-80 and price should falter below 115.00, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as 113.35-40 should contain downside. Only below previous resistance at 113.05 would defer and suggest top is formed, bring correction of recent upmove to 112.70-80 but reckon support at 112.39 would remain intact. 

Sunrise Market Commentary

• Rates: Underperformance of Bunds vs US Treasuries today?
  Today's eco calendar remains second tier, but EC economic forecasts and a speech by ECB Praet are wildcards. Higher growth forecasts could be a harbinger for higher ECB staff projections at the June policy meeting and raise ECB exit speculation. Praet could hint in the same direction, potentially resulting in an underperformance of Bunds today.
• Currencies: Dollar trending gradually higher with USD/JPY taking the lead
  Yesterday, the dollar gained modest further ground on higher core yields and higher oil prices. Today, strong EC economic forecasts might slow the decline of EUR/USD. Sterling traders will closely watch the BoE's inflation report even as the BoE will take a cautious stance going into the parliamentary elections

The Sunrise Headlines

• US stock markets managed to overcome initial weakness, but eventually ended flat. Overnight, most Asian equity markets are slightly in positive territory with China once more underperforming.
• New Zealand's central bank kept interest rates at a record low 1.75% and forecast they will remain there for an extended period, saying inflation will slow. NZD/USD fell from 0.6940 to 0.6820, the lowest level since June 2016.
• The Federal Reserve should begin plotting the shrinking of its $4.5T balance sheet after its next rate increase, Boston Fed Rosengren said, as he warned again over the risks of the economy overheating.
• Kansas City Fed researchers say that reducing the US central bank's $4.5T portfolio by $675B over two years is “about equivalent to a 25 bps hike in the funds rate.”
• Oil prices rose more than 3% with Brent crude back above $50/barrel, bolstered by the biggest one-week drop in US inventories so far this year, and after Iraq and Algeria joined Saudi Arabia in supporting an extension to OPEC supply cuts.
• Labour is planning to partly nationalise Britain's energy industry and fully renationalise the railways and Royal Mail, as Jeremy Corbyn prepares to launch his party's most left-wing manifesto since 1983.
• Today's eco calendar contains UK industrial production data, the BoE's policy meeting and weekly US jobless claims. ECB Praet and Fed Dudley speak. Italy and the US tap the market. The ECB publishes its monthly bulletin and the EC releases its April forecasts.

Currencies: Dollar Trending Gradually Higher With USD/JPY Taking The Lead

Dollar extends gradual rebound, in particular USD/JPY

The dollar traded uneventful on Wednesday. US and European equities didn't go anywhere and eco data were uneventful. A late session rally of oil and hawkish comments from Fed's Rosengren were moderately supportive for the dollar. USD/JPY profited most to close the session at 114.28, near the correction top. The gain of the dollar against the euro was much more limited. The pair closed at 1.0866, only marginally lower than on Tuesday (1.0874).

Overnight, most Asian equity indices gained ground with the Nikkei and the Korean indices at multi-month highs. The mainland China indices are captured in a protracted downtrend and are nearing first support levels. Until now the Chinese underperformance had little impact on other markets, but the issue deserves close monitory. USD/JPY (114.20) remains in risk-on modus, holding within reach of the recent highs. EUR/USD is going nowhere in the 1.0865 area. The Reserve Bank of New Zealand left its policy rate unchanged at 1.75%. The statement remained more neutral than markets had expected (see headlines). The RBZN welcomed the recent deprecation of the New Zealand dollar. NZD/USD dropped almost one big figure and trades in the 0.6835 area.

Today, US initial claims and the PPI will be published. Producer prices are expected to have risen modestly, both for the headline and the core reading to respectively 2.2% Y/Y and 2.3% Y/Y. Such an outcome would be quite neutral for (FX) markets. Initial claims are also expected little changed. The EU economic forecasts are interesting as they may give an idea on the important ECB staff estimate at the June ECB meeting. A positive assessment might be slightly supportive for the euro. ECB's Praet will speak again today. Will he give more weight to recent positive developments?

Earlier this week, fortunes changed (temporarily?) in favour of the dollar. Today, we expect the cautious uptrend in core yields to continue (see above EC Forecasts/eventually Praet). This remains positive for EUR/JPY, while the decline of EUR/USD might slow or even halt. The next more important dollar move might be driven by tomorrows US data (retail sales and CPI).

From a technical point of view, USD/JPY broke the 112.20 resistance improving the technical picture. The rebound continues in a gradual way, but looks quite robust. Next intermediate resistance comes in at 115.51. EUR/USD extensively tested the topside of the MT range (1.0874/1.0906 area) late March. The pair returned to that range top and broke above the 1.09/1.0950 resistance last week, but the break wasn't confirmed and a correction kicked in. A sustained break higher would improve the ST picture. Next resistance stands at 1.1129 (62% retracement) and at 1.1366 (correction top). A decline below 1.0821 would suggest that the dollar is regaining traction against the euro. Will tomorrow's US data be strong enough to do this Job?

EUR/USD correction to slow?

EUR/GBP

EUR/GBP drifting back to 0.84 area.

Yesterday, sterling showed no clear trading pattern. The modest EUR/USD decline initially weighed slightly on EUR/GBP. The pair dropped temporary below 0.84 but returned to the big figure later. Cable was better bid early the session. However, the 1.30 level was a tough resistance and the pair drifted back south. Some squaring of positions ahead of today's BoE decision was maybe also in play. EUR/GBP closed the session exactly at 0.84. Cable finished the day at 1.2938.

Today, the BoE policy decision and even more on the new BoE inflation report will dominate trading and trump the data releases. The policy rate is expected unchanged (0.25%). Last month, the tone of the BoE communication (inflation report) was rather hawkish. One member even voted for a rate hike. The eco assessment might now be a bit softer after the poor Q1 growth and slowdown in consumer spending. The BoE will probably continue to warn about an inflation overshoot, but the recent sterling strength and upcoming elections should result in more balanced to soft BoE comments. The timing of a potential first rate hike is still far away. This scenario is slightly sterling negative short-term.

EUR/GBP is locked in a ST sideways 0.83/0.85 range after a substantial decline in March/April. The pair came within reach of key 0.8305 support (Dec low), but no real test occurred. After a late April EUR/GBP rebound, the range bottom looks better protected. Longer term, Brexit-complications remain potentially negative for sterling. On technical considerations, we slightly prefer a EUR/GBP buy-ondips approach. A modest softening in the BoE tone might help solidify the Cable 1.30 cap and support a bottoming out process in EUR/GBP

EUR/GBP: will BoE slow the recent strong performance of sterling?

Download entire Sunrise Market Commentary

Market movers today

Focus continues to be on Scandinavian inflation with release of the Swedish figure for April. We estimate inflation took a leap up, above the Riksbank's estimate due to seasonality in the price of travel but this should be temporary. See more on page 2.

The European Commission is set to publish its updated economic project ion and we will keep an eye on its estimate of the structural unemployment rate (NAIRU) , as this is highly important for when wage pressure will pick up. In our view, NAIRU in the periphery count ries is likely to be revised lower as it is current ly estimated to be higher than prior to the financial crisis despite the labour market reforms in these count ries.

In the afternoon, at tention turns to the Bank of England (BoE) meeting, which includes policy announcement , minutes, the Inflation Report and a press conference. We do not expect any policy changes; hence, the interest ing part will be the policy stance after the neut ral stance was maintained but included a hawkish twist at the latest meeting. We expect the BoE to remove this hawkish twist again as GDP growth slowed to 0.3% q/q against its nowcast of 0.6%. Note that yesterday we published a strategy piece about the upcoming UK election.

Brent oil is back above USD50/bbl and the market will focus on the release of OPEC's monthly oil market report. In particular, it will look for details on the level of compliance to the output cut deal as well as comments on the potent ial extension of cuts in H2.

Selected market news

Yesterday, Mario Draghi said th e ECB's forward guidance was meant to address tail risk and some tail risks are less and less probable. This could point to a removal of the 'or lower levels' phrase in the forward guidance on policy rates wit hin the near future , which is likely to have considerable market implicat ions both from a fixed income and FX perspective. However, an aggressive price action does not seem to be what the ECB wants as it argues continuously about the need for favourable financing conditions in bringing underlying inflation pressure higher. See ECB research: Hawkish wording but changed forward guidance less likely, 10 May.

Apart from the comment above, Draghi had a fairly dovish tone during yesterday's speech, reiterating previous comments about the lack of underlying price pressure due to slack in the labour market. Note that yesterday, the ECB published a piece where it concluded that the labour market slack currently affects 15-18% of the euro area extended labour force, which is almost double the level captured by the actual unemployment rate at 9.5%. According to the ECB, this is likely to continue to contain wage dynamics.

In the US, Kansas City Fed finds that a USD675bn reduction in the Fed's bal ance sheet over two years is about equal to a 25bp rate hike in the Fed funds rate. At the upcoming June meeting, we believe the Fed will announce what conditions would t r igger a change in its current reinvestment strategy followed by an actual quantitat ive tightening (reduct ion in the balance sheet ) start ing in Q1 18. See FOMC review: Fed thinks weak GDP growth in Q1 was 'transitory', 3 May.

Asia Mid-Session Market Update: NZD tumbles over 1.5% to 11-month low as RBNZ fails to live up to expectation of more hawkish stance

US Session Highlights

(US) MBA MORTGAGE APPLICATIONS W/E MAY 5TH: +2.4% V -0.1% PRIOR

(US) APR IMPORT PRICE INDEX M/M: 0.5% V 0.1%E; Y/Y: 4.1% V 3.6%E

(US) DOE CRUDE: -5.2M V -1.5ME; GASOLINE: -0.2M V -0.5ME; DISTILLATE: -1.6M V -1ME

Equities opened lower today after news Trump had fired FBI Director Comey, but investors recovered some confidence throughout the session, sending most indices into positive territory, except for the Dow, which lost 32 points. NASDAQ volume was around 14% higher than its 3-month average, while the VIX rose 0.5% to 10. Energy sector was the outperformer on the S&P today on higher oil prices.

US markets on close: Dow -0.2%, S&P500 +0.1%, Nasdaq +0.1%

Best Sector in S&P500: Energy

Worst Sector in S&P500: Industrials

Biggest gainers: NVDA +17.8%; EA +12.7%; COTY +11.9%

Biggest losers: FTR -7.7%; PCLN -4.5%; AGN -3.7%

At the close: VIX 10.2 (+0.2pts); Treasuries: 2-yr 1.36% (+2bps), 10-yr 2.41% (+1bps), 30-yr 3.04% (flat)

US movers afterhours

NTES Reports Q1 $4.75 v $4.25e, R$1.98B v $1.60Be; Acting CFO resigns for personal reasons; raises dividend 6.9% to $1.08 from $1.01 (implied yield 1.5%); +3.6% afterhours

WFM Reports Q2 $0.37 adj v $0.37e, R$3.7B v $3.73Be; appoints five new independent directors, increases dividend 29%; names new CFO; +2.7% afterhours

FOXA Reports Q3 $0.54 adj v $0.48e, R$7.56B v $7.68Be; -3.1% afterhours

CTRP Reports Q1 $0.16 (adj) v -$0.06e, R$891M v $865M; -4.2% afterhours

HOLX Reports Q2 $0.50 v $0.46e, R$715.4M v $685Me; -7.1% afterhours

SYMC Reports Q4 $0.28 v $0.28e, R$1.12B v $1.17Be; Guides Q1 $0.28-0.32 v $0.37e, R$1.19-1.22B v $1.28Be; -7.1% afterhours

SNAP Reports Q1 -$2.31 v -$0.22e, R$149.6M v $150Me; daily active users (DAUs) 166M, +5% q/q, +36% y/y (+9M to 167M expected); -23.1% afterhours

STRP: Verizon said to have won bidding war for Straight Path to acquire company for $3.1B - financial press

Key economic data

(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED

(JP) JAPAN MAR BOP CURRENT ACCOUNT TOTAL: ¥2.91B V ¥2.59TE; ADJ CURRENT ACCOUNT TOTAL: ¥1.73T V ¥1.74TE; TRADE BALANCE BOP BASIS: +¥866B V + ¥855BE

(JP) JAPAN APR BANK LENDING (INC TRUSTS) Y/Y: 3.0% V 3.0% PRIOR; BANK LENDING (EX-TRUSTS) Y/Y: 3.0% V 3.0%E

Asia Session Notable Observations, Speakers and Press

Asian equity markets trading mixed, tracking a similar close on Wall St where a rebound in oil prices helped the energy sector outperform. Mainland China market is among the laggards following local press reports of Premier Li maintaining commitment to reducing overcapacity in iron, steel, and coal mining sectors, while Baosteel also cuts its product prices for the first time in months. Nikkei225 is among the best indices amid ongoing JPY pressure in US hours despite the first profit decline for Toyota Motors in years.

FX majors were volatile as RBZN rate decision was decidedly more neutral than anticipated. RBNZ said it was looking past the rising inflation with its neutral stance given the recent cooling in Auckland housing market, and its latest projections only see the next rate hike in late 2019 vs analyst projections of late 2018. NZD/USD fell to 10month lows below 0.6820 on the decision and the commentary by Gov Whleeler. USD/CAD also rose some 70pips to 1.3740 after Moody's cut its rating on Canada's top banks.

China

(CN) China Premier Li Keqiang: China will continue phasing out capacity, especially in iron, steel, coal mining, and coal fired power plants to keep up with targets set for the year - State Council meeting

(CN) ANZ economist: China reflation cycle in producer prices has probably peaked and will trend down, dragging H2 economic growth - Chinese press

(CN) China anticipates vegetable prices to continue falling amid rising supply and warm weather - Chinese press

(CN) PBOC said to increase its coordination with financial regulators for banking, securities and insurance on implementing regulations - Chinese press

Japan

(JP) Japan PM Abe may reshuffle cabinet as soon as Aug - Nikkei'

Australia/New Zealand

(AU) Australia PM Turnbull: Treasury officials to meet with bank officials in Sydney on Thursday to discuss details of levy

(NZ) RBNZ Gov Wheeler: Inflation expectations would have to rise for a hike in OCR; Do not expect inflation to move rapidly on US - speaking in parliament

(NZ) RBNZ's McDermott: Underlying inflation pressure is no different today than in Feb; Not unhappy from NZD decline following RBNZ decision today - press

(NZ) ANZ economist: Today's RBNZ decision obviously more dovish than expected - NZ press

Asian Equity Indices/Futures (01:00ET)

Nikkei +0.4%, Hang Seng +0.2%, Shanghai Composite -0.4%, ASX200 flat, Kospi +0.9%

Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax flat, FTSE100 flat

FX ranges/Commodities/Fixed Income (01:00ET)

EUR 1.0860-1.0880; JPY 114.10-114.35; AUD 0.7330-0.7365; NZD 0.6820-0.6935

June Gold +0.1% at 1,221/oz; June Crude Oil +0.8% at $47.61/brl; July Copper +0.2% at $2.50/lb

(CN) China said to cut fuel prices, effective May 12th - Oilchem

iShares Silver Trust ETF daily holdings rise to 10,532 tonnes from 10,412 tonnes prior

(JP) Japan MoF sells ¥0.72T v ¥0.8T offered in 30-year 0.8% (0.8% prior) JGBs; Avg yield: 0.819% v 0.795% prior; bid to cover: 3.35x (6-month high) v 3.08x prior

Asia equities notable movers

Australia

JB Hi Fi (JBH) -1.0%; Cut at Citi

CSR (CSR) -4.0%; Cut at Citi

GrainCorp (GNC) +7.8%; H1 result

Myer (MYR) -3.0%; Q3 result

Japan

Toyota (7203) flat; FY16/17 result

Softbank (9984) +1.9%; FY16/17 result

Japan Tobacco (2914) +3.3%; FY16/17 result

China/Hong Kong

Baoshan Iron Steel -2.5%; cuts product prices

Kaisa Group (1639) -0.9%; Apr sales

Greenland HK (337) +0.8%; Apr sales

Semiconductor Manufacturing Int'l (981) -3.3%; Q1 result

Key Points:

• We may have finally reached a bottom for the metal.
• Technical bias is reversing to bullish.
• Fundamentals remain in play and could help to push silver higher.

Silver prices have been in free fall over the past few weeks but the bulls look as though they are finally mounting some sort of resistance. Specifically, there is mounting evidence that the embattled metal may finally be reaching a turning point which could mean some near-term gains are now on the way. However, given the sheer velocity of the plunge, it may be prudent to take a closer look at why we expect to see momentum reverse as the week comes to an end.

The most obvious impediment to ongoing losses is the rather well tested long-term trend line shown below. As has been illustrated, the metal has come into conflict with the ascending trend line on numerous occasions and, as a result, the bulls have rallied around this support level. This has already had the effect of moderating downside risks over the past few sessions which leaves silver with a sound footing from which to mount a recovery.

Whilst the presence of the trend line is a fairly strong indication that losses are capped, it doesn't exactly require the metal to have the notable recovery that we are currently forecasting. Fortunately, a handful of other technical measures are signalling that just such a move to the upside is warranted. For one, both stochastics and the RSI are heavily oversold and are in desperate need of being relieved. However, the parabolic SAR is also on the cusp of inverting to bullish which might indicate a medium-term change in momentum is almost upon us.

If this is the case, we can expect to see gains extend to somewhere in the realm of the 17.224 – 16.758 band. This is largely due to the fact that this band falls between the 38.2% and 61.8% Fibonacci levels and a move to at least the lower end of this range would relieve the oversold readings. Additionally, the 17.224 level should prove to be a near-term peak for silver as it the 100 day EMA will also be exerting some selling pressure around this price which will severely limit upside potential.

Ultimately, despite the strong technical bias, remember to keep an eye on the fundamentals as they are likely to remain in play this week. Notably, safe havens like silver are going to be reacting to headline risks and the like which makes keeping a watch on Trump a fairly good bet, especially now that the French elections are out of the way and he seems to once again be making divisive political manoeuvres.

Key Points:

• Price action forms an ABCD Pattern.
• Key support zone around 0.84 handle looming.
• Watch for a pullback towards the 0.83 handle in the coming days.

The EURGBP has been under pressure over the past week as the broader Euro has continued to be buffeted by headwinds around both the Brexit and the French election. This has subsequently culminated in a continual drift lower for the pair despite some stabilisation of the French political situation. However, the technical indicators are suggesting that the decline is likely to continue in the near term…here’s why.

A cursory glance at the charts shows the dilemma that the pair currently faces with price action’s upward momentum largely having been capped by the 200 day MA. This fact, along with some volatility and a gap from the French election, has produced a relatively clear ABCD pattern that is strongly hinting at future declines in the coming days. In particular, the “D” leg is yet to complete and, subsequently, this would require a concerted decline towards the -61.80% Fibonacci level at 0.8326. Adding further weight to the bearish contention is the fact that price action is now sitting on a key zone of support, around the 0.8400 handle, and any further dips will only confirm an extension of the move towards the reversal zone (D Leg).

However, there are a few contradictory signals with the RSI Oscillator currently firmly within oversold territory. Subsequently, there may be a need for a period of moderation before a breach of support, and the continuation of the decline recommences. Regardless, all of the ingredients are in place for some significant downside moves in the coming days.

Fundamentally, there are also some risk events looming on the horizon for both the EU and UK economies. Primarily, the UK Bank of England is getting ready to meet to determine their near term interest rate regime. As a single event, this probably has the biggest propensity to cause volatility for the pair, especially if the central bank surprises with some hawkish rhetoric. From the Eurozone’s perspective, the Industrial Production figures are also relatively important and will be closely watched by the market.

Ultimately, the most realistic scenario for the pair is a short period of sideways moderation before a concerted break occurs that takes price action towards the 0.8300 handle to complete the “D” leg. However, please note that there are some key fundamental risk events looming which should be monitored for volatility.

For the 24 hours to 23:00 GMT, the AUD rose 0.11% against the USD and closed at 0.7355.

LME Copper prices rose 0.3% or $16.0/MT to $5512.0/MT. Aluminium prices declined 0.2% or $4.0/MT to $1870.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7348, with the AUD trading 0.1% lower against the USD from yesterday’s close.

The pair is expected to find support at 0.7321, and a fall through could take it to the next support level of 0.7295. The pair is expected to find its first resistance at 0.7384, and a rise through could take it to the next resistance level of 0.7421.

In absence of any economic releases in Australia today, investor sentiment would be governed by global macroeconomic factors.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR declined 0.13% against the USD and closed at 1.0866, after the European Central Bank's (ECB) President, Mario Draghi, brushed off calls to scale back its stimulus programme, reiterating that underlying inflation continues to remain subdued and lack a convincing upward trend.

On the macro front, data indicated that the US posted a more-than-expected budget surplus of $182.4 billion in April, compared to a deficit of $176.2 billion in the previous month, while markets were expecting the nation to post a surplus of $179.0 billion. Additionally, the nation's MBA mortgage applications rebounded 2.4% in the week ended 05 May 2017, following a drop of 0.1% in the previous week.

Other economic data revealed that the export price index in the US advanced 0.2% on a monthly basis in April, meeting market expectations and compared to a revised rise of 0.1% in the previous month. Moreover, the nation's import price index registered a rise of 0.5% MoM in April, beating market consensus for an advance of 0.1%. In the prior month, the index had recorded a revised rise of 0.1%.

In the Asian session, at GMT0300, the pair is trading at 1.0877, with the EUR trading 0.1% higher against the USD from yesterday's close.

The pair is expected to find support at 1.0853, and a fall through could take it to the next support level of 1.0828. The pair is expected to find its first resistance at 1.0900, and a rise through could take it to the next resistance level of 1.0922.

Moving ahead, market participants will look forward to the ECB's economic bulletin as well as the European Commission's economic growth forecast reports, slated to release in a few hours. Moreover, in the US, weekly jobless claims data, scheduled to be released later in the day, will be on investors' radar.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP declined 0.14% against the USD and closed at 1.2929.

In the Asian session, at GMT0300, the pair is trading at 1.2940, with the GBP trading 0.09% higher against the USD from yesterday's close.

Overnight data showed that UK's RICS house price balance remained steady at a level of 22.0 in April, compared to market expectations for a drop to a level of 20.0.

The pair is expected to find support at 1.2913, and a fall through could take it to the next support level of 1.2886. The pair is expected to find its first resistance at 1.2977, and a rise through could take it to the next resistance level of 1.3014.

This afternoon will bring the Bank of England's (BoE) interest rate decision, wherein the central bank is widely expected to keep interest rates on hold. Also, the BoE's quarterly inflation report accompanied with UK's construction output, industrial production, manufacturing production, trade balance and NIESR GDP estimate data, will keep investors on their toes.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.