UK inflation data knocked forecasts out of the part with another 2% jump in October, bringing the yearly rate to a 40-year high of 11.1%.
Energy prices were the primary culprit, so one silver lining was that the core inflation rate – which excludes energy and food prices – came in slightly lower than forecast at 6.5%.
Combined with yesterday’s hot labour market data, we have a potent mix that will probably drive hawkish policy from the Bank of England, even though the BoE insisted that rate hikes will be less aggressive in the months to come.
Sterling seems unsure how to react to all of this; Cable has cut back 0.2% this morning, after reaching three-month highs of US$1.174 in yesterday’s session.
GBP/USD eyes up August highs – Source: capital.com
But that could be down to a generally weaker greenback- the US Dollar Index (DYX) is inversely at three-months lows of 105.95 as investors turn riskier equities bets
The euro added 44 bps against Sterling this morning after ceding over 70 bps yesterday, in pretty typical fashing for the ranging EUR/GBP which is changing hands at 87.57p right now.
GBP/JPY is sitting at 165.55 while GBP/CHF is at 1.119.
Eurozone employment and GDP data marked an expected deceleration in the economy, yet the euro’s recovery against the dollar seems like it’s keeping pace, even if
Now trading at US$1.038, EUR/USD is steadily approaching July highs.