Pound Climbs as Sticky Core Inflation Boosts BoE Bets

Pound (GBP) Buoyed by BoE Rate Hike Bets

The Pound (GBP) marched higher during yesterday’s session after hotter-than-forecast UK inflation data raised expectations for more Bank of England (BoE) interest rate rises.

Although July’s latest consumer price index showed that headline inflation eased as anticipated, core inflation unexpectedly held steady at 6.9%, rather than dropping to 6.8%. Meanwhile, service sector inflation ticked higher.

Looking ahead, a lack of British data today could see Sterling trim its gains.

Euro (EUR) Mixed despite Upbeat Data

The Euro (EUR) failed to find a clear direction yesterday, despite some positive Eurozone economic releases.

Industrial production in the bloc beat forecasts, unexpectedly growing by 0.5% in June. Meanwhile, the latest estimate for the bloc’s GDP confirmed a return to growth in the second quarter.

Aside from the bloc’s balance of trade report, Eurozone economic data is in short supply today. This could leave EUR to trade listlessly.

US Dollar (USD) Rises on Hawkish Fed Minutes

The US Dollar (USD) was also mixed yesterday as USD investors were cautious ahead of the minutes from the Federal Reserve’s most recent policy meeting.

After the minutes were published, the ‘Greenback’ gained ground. Policymakers struck a fairly hawkish tone, indicating the possibility of more US rate hikes.

Turning to today, the latest initial jobless claims figure could impact USD. If the data prints above forecast again, following the previous week’s sharper-than-expected rise, the US Dollar could face headwinds.

Canadian Dollar (CAD) Wobbles Lower as oil Prices Waver

The Canadian Dollar (CAD) wavered lower yesterday as volatility in the oil markets weighed on the commodity-linked currency.

Today, a continued lack of data could leave CAD to trade on oil price dynamics. Crude is currently on the rise – could this help CAD firm during today’s session?

Australian Dollar (AUD) Drops following Downbeat Jobs Report

The Australian Dollar (AUD) slumped last night after a larger-than-forecast rise in unemployment saw markets rein in expectations for more rate hikes from the Reserve Bank of Australia (RBA).

New Zealand Dollar (NZD) Slides on AUD Correlation

The New Zealand Dollar (NZD) also fell sharply overnight, as NZD’s positive correlation to AUD saw the ‘Aussie’ drag the ‘Kiwi’ down with it.

Samuel Birnie

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