Pound Tumbles as UK CPI Fuels Cost-of-Living Fears

Pound (GBP) Falls following UK Inflation

The Pound (GBP) slid during yesterday’s session after UK inflation jumped from 7% to a 40-year high of 9%.

With the UK potentially facing a recession, and the Bank of England (BoE) reluctant to continue raising interest rates, the hot inflation print pressured the Pound.

During today’s session, the latest data from the Confederation of British Industry (CBI) could impact Sterling. However, GBP investors may pay closer attention to domestic political news, such as how the government plans to tackle the cost-of-living crisis.

Euro (EUR) Wavers as Inflation Misses Forecasts

The Euro (EUR) wobbled yesterday as investors mulled the final inflation rate reading from the Eurozone.

Eurozone inflation held at 7.4% in April, marginally lower than preliminary estimates of a rise to 7.5%. EUR traders seemed slightly disappointed with the result as it puts less pressure on the European Central Bank (ECB) to raise interest rates.

Later today, the ECB’s April meeting minutes are due out. If policymakers struck a hawkish tone last month then the single currency could climb.

US Dollar (USD) Wobbles amid Mixed Market Sentiment

The US Dollar (USD) fluctuated yesterday as a tepid market mood left the safe-haven ‘Greenback’ without a clear direction.

However, USD was able to firm against its weaker rivals as it enjoyed modest tailwinds from a hawkish speech by Federal Reserve Chair Jerome Powell on Tuesday evening.

Today’s initial jobless claims data could offer USD some support. Otherwise, risk appetite may be the defining factor for USD exchange rates.

Canadian Dollar (CAD) Undermined by Oil Volatility

The Canadian Dollar (CAD) had mixed success yesterday. A higher-than-expected Canadian CPI boosted CAD, although volatility in the oil market undermined the commodity-linked currency.

Aside from today’s Canadian PPI report, oil price dynamics may drive most movement in the ‘Loonie’.

Australian Dollar (AUD) Spikes on Latest Jobs Data

The Australian Dollar (AUD) spiked overnight after the Australian unemployment rate printed at 3.9%, as forecast.

However, the ‘Aussie’ then shed some of these gains as investors digested the data. Employment rose by far less than forecast while the participation rate declined.

New Zealand Dollar (NZD) Firms despite Cautious Trade

The risk-sensitive New Zealand Dollar (NZD) also rose higher overnight, paring some of its gains towards the end of the session, despite a subdued market mood.

Samuel Birnie

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