In the absence of any major news or political developments, extremely tight ranges held sway throughout the trading day

Major currencies in detail

GBP

The Pound rose very slightly as markets were reassured that the Conservatives’ lead over Labor has stabilized at a healthy 10% level or above. Specifically, the Guardian poll published after the television questioning of both candidates shows the lead at 12 points.

Today we expect no major economic news, so Sterling should track very closely with the Conservative poll lead in the polls that are released.

EUR

The Euro started the trading session on the wrong foot, driven down by soft German inflation data. However, technical factors soon drove it toward 1.12, though it failed to hold that level and pulled back to end the session largely unchanged.

Action should return to the common currency today, as advance inflation data for the month of May is released. Markets are expecting a pullback after the increases of the last two months. Soft German data means that an even more negative print is a clear possibility, which would weigh on the Euro.

USD

The Dollar was no exception to the theme of extraordinarily tight ranges yesterday, moving in a range of 10 basis points in trade weighted terms throughout the London session.

Personal consumption data confirmed the picture of an economy that is growing steadily but without significant inflationary pressures. This means a June hike by the Federal Reserve is a near certainty, but the September decision is far less clear.

Tomorrow evening the Federal Reserve releases its “beige book”, a long report on the state of the US economy compiled by the central bank’s regional branches. This may make for some unusual volatility late in the London evening.

All eyes remain firmly on the key payroll report on Friday. Another steady-as-she-goes release would seal the case for a June hike in the US rates.