NEWS / Foreign Exchange

UK CPI Y/Y Breaks 3.0%; GBP/USD Breaks $2.00

- The European indices are currently trading lower following some bad news for Debenhams, which does not expect to reach their full year profit goal, as well as news for Telecom Italia, and Pirelli, after AT&T announced that they were retracting their bid to buy a stake in Telecom Italia??™s controlling shareholder.

- European government bonds are currently trading lower in the session following stronger than expected readings for the April ZEW survey. Similarly in the UK Gilts are trading lower as well after y/y CPI breached the 3.0% level for the first time since 1992.

- Swiss adjusted retail sales fell by less than expected to 4.5% in February from 5.1% in January as a result of economic confidence and a rise in employment.

- UK consumer prices and retail prices rose by more than expected to multi-year highs once again, exceeding estimates on all fronts. The key figure, CPI y/y breached the 3.0% level coming in at 3.1% prompting the Bank of England??™s Mervyn King to send an explanatory letter to the Chancellor of the Exchequer. The reading of more than a percentage point away from the bank's 2.0% target now requires King to write to Chancellor of the Exchequer Gordon Brown to publicly account for the deviation and outline his plans to quell inflation. The CPI data pushed the GBP/USD above the $2.00 mark for the first time since September of 1992.

- German ZEW economic sentiment rose by more than expected to a 9-month high of 16.5 for the month of April, while the current situation rose to a new all time high of 76.9. According to the ZEW??™s Schmidt the rise in the ZEW survey was a result of good industrial output.

- Euro-Zone ZEW economic sentiment rose by more than expected to a ??“9-month high of 10.7 for the month of April. The Euro-Zone trade deficit narrowed by much more than expected to a deficit of ?‚¬1.7B in February from a deficit of ?‚¬7.0B in January.