Pound Wavers as UK Core Inflation Climbs to 31-Year High

Pound (GBP) Spikes on Shock Core CPI Jump

The Pound (GBP) found fleeting gains yesterday, following the latest consumer price index data which printed beyond expectations.

Headline CPI cooled sharply to 8.7%, but the real focus was on core inflation. Which jumped to a 31-year high of 6.8%. While this bolstered Bank of England (BoE) rate hike bets Sterling sentiment later soured amid a gloomy market mood.

Today, a relative lack of market moving data for Sterling may keep movement subdued. However, if rate hike bets continue to rise, GBP may see support.

Euro (EUR) Strengthens Despite Downbeat German Data

The Euro (EUR) strengthened yesterday, despite a strong US Dollar and tepid German economic data capping its upside.

The Ifo business climate index for May printed below forecasts, dropping to 91.7 from 93.6. This indicated a slip in optimism within the bloc’s largest economy, and may have kept EUR investors cautious.

This morning, the German GfK consumer confidence index printed at -24.2, just missing forecasts. Similarly, Germany’s quarterly GDP was revised to -0.3%, indicating a technical recession. Could this weigh on EUR as the session continues?

US Dollar (USD) Climbs amid Stalling Debt Ceiling Negotiations

The US Dollar (USD) gained ground during yesterday’s European session, as anxieties over US debt ceiling negotiations continued.

The latest Federal Open Market Committee (FOMC) minutes may have trimmed these gains, however. The minutes pointed to a growing split in support for additional tightening.

The latest initial jobless claims figures are scheduled for release this afternoon. Could another fall indicate room for further rate hikes and boost USD?

Canadian Dollar (CAD) Soars amid Surging Oil Prices

The Crude-linked Canadian Dollar (CAD) continued its recent momentum yesterday, with oil prices continuing to surge.

If oil prices keep their current pace, the ‘Loonie’ is likely to continue strengthening despite a lack of impactful data.

Australian Dollar (AUD) Weighed Down by Souring Market Mood

The risk-sensitive Australian Dollar (AUD) saw minimal support in overnight trade. A sour market mood combined with readjusted rate hike bets weighing on the ‘Aussie’.

New Zealand Dollar (NZD) Remains Weak as Dovish RBNZ Hike Dents ‘Kiwi’

The New Zealand Dollar (NZD) continued falling overnight, as investors mulled the Reserve Bank of New Zealand’s (RBNZ) dovish hike.

John Mulcahey

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