Pound (GBP) Strengthens following UK CPI

Pound (GBP) Rallies as Inflation Impresses

The Pound (GBP) marched higher yesterday following the UK’s consumer price index release for August.

Headline inflation unexpectedly eased, providing some relief to households worrying about the cost-of-living crisis. Meanwhile, core inflation edged higher as price pressure broaden, solidifying expectations for another strong interest rate rise at the Bank of England (BoE) meeting next week.

Turning to today, a lack of UK data could see Sterling trade on domestic factors. Will the subdued mood amid a period of national mourning limit movement in the Pound?

Euro (EUR) Undermined by Dovish ECB Comments

The Euro (EUR) initially rose yesterday as EUR investors remained hopeful of a potential end to the European energy crisis. Ukraine’s recent battlefield victories cheered traders, while the EU’s plan to support economies through the crisis added to the optimism.

However, the single currency lost its gains in the afternoon following dovish comments from European Central Bank (ECB) Chief Economist Philip Lane. Lane hinted that future interest rate rises may be smaller than last week’s 75-bp hike.

The single currency may attempt another rally today if news coming from Ukraine remains broadly positive.

US Dollar (USD) Dips amid Profit Taking

The US Dollar (USD) wavered yesterday, ticking slightly lower overall, as the currency struggled to retain yesterday’s post-inflation gains.

Some traders seemed happy to cash in on yesterday’s rally, leading to some selling around the ‘Greenback’. In addition, USD investors were perhaps disappointed that the PPI release didn’t exceed expectations.

Looking ahead, markets expect US retail sales and industrial production to reveal some lacklustre results this afternoon, which may leave USD vulnerable to further losses.

Canadian Dollar (CAD) Firms amid Uptick in Oil Prices

The Canadian Dollar (CAD) ticked higher on Wednesday, with the commodity-linked currency appreciating in response to a modest uptick in oil prices.

Australian Dollar (AUD) Subdued as Employment Data Misses

The Australian Dollar (AUD) struggled to attract support overnight on Wednesday, after Australia’s latest jobs report missed the mark. Australia’s economy added fewer-than-expected jobs in August, while the unemployment rate also unexpectedly ticked up.

New Zealand Dollar (NZD) Muted Despite Upbeat GDP Release

The New Zealand Dollar (NZD) was left mostly rangebound in overnight trade as a cautious market mood left the ‘Kiwi’ muted in spite of a stronger-than-expected GDP print in the second quarter.

Matthew Andrews

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