GBPUSD, Daily
US preliminary May consumer sentiment jumped 6.8 points to 95.8, much stronger than expected, after dipping 2 points to 89.0 in April. It is the highest since last June, and recently has been high as 98.1, reached in January 2015 (which was the best in over a decade). The current conditions index rose to 108.6 from 106.7. The expectations index climbed almost 10 points to 87.5 from 77.6, and is the biggest increase since 2006. The 12-month inflation gauge slid to 2.5% from 2.8%, while the 5-year index sped up slightly to 2.6% from 2.5%.
The Michigan sentiment bounce to a 95.8 eleven-month high reversed a four-month string of declines to 89.0 in April from 92.6 in December, as the index rises well above the 87.2 ten-month low in September but below the 98.1 cycle-high in January of 2015 that marked the strongest reading since January of 2004. The pattern of upward revisions in “final” Michigan sentiment reports has dissipated, given boosts in just four of the last ten months, and an average revision in 2016 of zero. We saw prior average boosts of 0.4 in 2015, 0.6 in 2014 and 1.8 in 2013. We will assume a 95.8 “final” print for May. For other May measures, the IBD/TIPP index rose to 48.7 from 46.3, versus a 54.0 cycle-high in October of 2012. The Bloomberg Consumer Comfort index slipped to 41.7 in the second week of May from 42.0 in the prior week and a 43.0 average in April, versus a 45.7 cycle-high average in April of 2015. We expect a consumer confidence rise to 95.0 from 94.2 in April but a higher 96.1 in March, versus a 103.8 cycle-high in January of 2015.
More positive news for the USD today, USDIndex rallies to a two week high at 94.7 and GBPUSD falls to three week low at 1.4361.
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