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GBP sell off as US release CPI figures

GBP - British Pound

The pound sold off against the US dollar on Wednesday as the US CPI figures came out much higher than expected.

US inflation rate increased by 4.2% year-over-year in April compared to an expected 3.6%, while core inflation rate grew by 3% compared to an expected 2.3%. Concerns of an earlier than expected Federal Reserve response to inflationary pressures, in the wake of a large jump in US consumer prices led to a stronger dollar.

The foreign exchange market will focus on employment data from the US today, with better than expected figures typically leading to positive gains for the dollar.

Key Movers

Yesterday, the EU reported that industrial production grew by 0.1% month-over-month in March compared to an expected growth rate of 0.7%. On a year-over-year basis, industrial production increased by 10.9%.

The euro held steady against the pound yesterday showing resilience despite a stronger US dollar, after the European Commission raised its growth forecasts for the bloc. The Eurozone economy is expected to expand by 4.3% this year, which is revised up significantly from 3.8% growth previously forecasted.

There is no high impacting data from either the UK or the Eurozone today, so Covid developments are likely to be the main focus on how the currencies perform.

Expected Ranges

GBP/USD: 1.4005 - 1.4070 ▼

GBP/EUR: 1.1615 - 1.1645 ▲

EUR/USD: 1.2075 - 1.2095 ▼