The pound hit a 4-day low of 1.4172 in the wake of below-forecast inflation data, as the consumer price index slowed to 2.5% in March versus expectations of a 2.7% which was the same reading in February.
The data prompted market concerns that the Bank of England will not raise rates further after the high expectations to be raised at next month's meeting. The recent positive data and the positive developments in Brexit negotiations have raised expectations that the bank will hike rates further at November meeting.
Also, eurozone inflation slowed in March to 1.3%, making it more difficult for the ECB to push inflation near its target near the 2% level.
On the other hand, the US dollar rose from its 3-week lows, as concerns about the trade war eased, as well as positive US data that boosted the dollar against the yen and thus renewed risk appetite.
US equity markets rebounded from strong corporate earnings, which helped European stocks earlier this morning, also the Asian equity markets has rebounded as Japan's Nikkei rose to a seven-week high.
Today, the markets are watching the Bank of Canada interest rate decision and are widely expected to be held unchanged at 1.25%. The Bank may raise its expectations for a hike this year through the Monetary Policy Report to be released today. In addition, it will be a press conference for Stephen Poloz, Bank of Canada Governor.
