G7 conclusion
Yesterday’s publication of UK inflation data reached markets before the European and UK open. Whilst headline CPI is arguably less important for Bank policy than other inflation-focussed statistics such as services inflation, the release still demands market attention. Yesterday’s publication showed UK inflation above forecast for April. April is always a challenging month for price forecasts because so many major goods and services are repriced at the start of the new financial year. Unpredictable annual price adjustments to services, utilities and telecommunications in particular often leave April as an outlying inflation publication. Year-on-year CPI inflation to April 2025 recorded at 3.5% versus a 3.3% forecast.
During the publication, GBP was relatively stable. However, as the European session progressed it was a beneficiary of a receding US Dollar as markets questioned Congress’s appetite for Trump’s tax bill. A busy day on the economic calendar, today will see high salience hard and soft data published across the EU, UK and US. Today also marks the conclusion of the G7 finance summit in Canada. As always that summit will conclude with a communique of the key aspects of this three-day meeting. That publication rather helpfully contains a statement on FX.
That statement hasn’t changed in many years. Each time it reaffirms the same simple messages we would expect from the finance and central bank chiefs of the seven most developed economies on the planet. It states that exchange rates should be determined by an open market. That excessive volatility can cause risks to the economy and that competitive exchange rate devaluations should not be tolerated amongst the G7. Cue Bessent. Markets are keen to see if their theory of a structurally weaker US Dollar is still the pursuit of Washington in its so-called Mar-a-Largo accord. Whilst an outside risk, any change to the G7 ministers’ statement in the communique, expected to be published later today, would be near-certain proof that the accord is alive.
Discussion and Analysis by Charles Porter
Related Insights
Daily Brief – Defiance
Charles Porter
Tue 12 May 2026
Defiance Yesterday’s market was defying one of two things: logic or gravity. Come to think of it, perhaps both. Take cable, GBPUSD, yesterday. The key events beyond minor data releases centred around any chatter from either side of the Iranian conflict and Starmer singing for his supper. Sing he did and tweet the President did, […]
Daily Brief – A technicality
Charles Porter
Thu 25 Jun 2026
A technicality Markets appeared to be fatigued by Trump’s Iran war before a ceasefire had even been agreed. This was evident from pricing that would have been considered complacent should the conflict have dragged on longer than it ultimately did. Now, that saga is far from over – it’s inevitable, for example, that as the […]
Daily Brief – Short-lived relief rally
Charles Porter
Tue 19 May 2026
Short-lived relief rally A tantrum in the bond market has continued to erode away at risk conditions in recent sessions. In the UK, the sell-off in gilts and corporate bonds has been particularly acute thanks to heightened political instability, the origins of which we have covered thoroughly in recent briefings. Yesterday, headlines delivered enough optimism […]
