United Kingdom: Inflation Data and Economic Indicators

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Inflation Figures:
The UK's Consumer Price Index (CPI) for April is set to be released on May 21. Current market expectations point to a year-over-year CPI of 2.6% and a month-over-month rise of 0.3%. Core CPI is expected at 3.4% y/y and 0.5% m/m. These figures, if confirmed, suggest that inflation remains above the Bank of England's 2% target, which may influence the central bank’s forward guidance and monetary policy stance.

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Public Sector Borrowing:
On May 22, the UK will release data on Public Sector Net Borrowing for April. Analysts expect borrowing to remain elevated, with a forecast of approximately £16.44 billion, indicating continued government reliance on debt to support fiscal programs.

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PMI Surveys:
Preliminary Purchasing Managers' Index (PMI) data for May is also scheduled for May 22. Forecasts suggest the Manufacturing PMI will come in around 45.4, Services PMI at 49.0, and Composite PMI at 48.5. With all expected readings below 50, markets will interpret this as a sign of contraction across key sectors of the economy, possibly weighing on the British pound.

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United States: Credit Rating Downgrade and Economic Indicators

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Credit Rating Downgrade:
Moody's has just downgraded the U.S. credit rating from AAA to AA1, citing growing federal debt and sustained fiscal deficits totaling $36 trillion. This move triggers a sell-off in U.S. Treasuries, with 30-year yields rising above 5% and the U.S. dollar coming under pressure as investors reassess risk across dollar-denominated assets.

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Leading Economic Index:
On May 19, the Conference Board reports that the U.S. Leading Economic Index (LEI) falls by 1.0% in April to 99.4, following a 0.8% drop in March. This marks the largest monthly decline since March 2023, signaling growing concerns about the outlook for the U.S. economy.

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