GDP report for Q1 2023 as well as flash CPI data for April from Spain was released at 8:00 am BST today. While inflation data came in lower-than-expected, GDP beat expectations. Headline CPI inflation accelerated from 3.3% to 4.1% YoY but market expected an acceleration to 4.4%. Meanwhile, flash GDP report showed Spanish economy expanding at a pace of 3.8% YoY in Q1 2023, up from 2.6% YoY reported for Q4 2022 and above 3.1% YoY expected by the market.

Markets seem to give more gravity to miss in inflation data with EUR dripping slightly on the news. Lower inflation pressures than expected mean that ECB will have less reasons to continue steep rate hikes going forward. However, a lot will depend on releases from other European countries, especially Germany (today at 1:00 pm BST).

EURUSD dropped after release of Spanish data and erased around a half of the move higher that was triggered by French CPI release at 7:45 am BST. Source: xStation5