UK inflation hits 40-year high
Thursday 23 June, 2022
Daily Currency UpdateSterling dropped immediately after the release of UK inflation data which printed a figure largely as expected of 9.1%, however some crucial elements of the report were softer, which could end up supporting the currency. Sterling’s reaction to the data was extremely mixed. When the data was initially printed, GBPUSD dropped well below the $1.22 handle and was down 0.9% on the day, however by 3pm UK time GBPUSD was back above $1.23. GBPUSD is now back trading into the mid $1.22s. It was a similar story for GBPEUR dropping to around €1.16 on the release, however it recovered to the mid €1.16s and then dropped back below the €1.16 handle once again.
The market will now look to manufacturing and services PMI data releases this morning.
Key MoversThe US dollar was under pressure yesterday as markets were feeling slightly concerned that the US Federal Reserve’s commitment to halting ever-increasing inflation could end up causing a recession the US. Overnight, Jerome Powell, the Federal Reserve’s Chair, said to congress that the central bank is fully committed to bringing prices under control even if doing so risks an economic downturn. This caused EURUSD to trade back above the $1.05 handle.
This morning we had a raft of services and manufacturing PMIs released from Europe. The data showed a sharp drop off in the Eurozone economy across June which has caused a further decline in EUR/USD this morning. It sits just below the $1.05 handle again.
- GBP/USD: 1.2170 - 1.2280 ▼
- GBP/EUR: 1.1570 - 1.1665 ▲
- GBP/AUD: 1.7650 - 1.7810 ▲
- EUR/USD: 1.0470 - 1.0580 ▼