Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools.

Inflation in the UK doubles in a year

GBP - British Pound

UK inflation doubling is perhaps the last headline you want to read whilst the economy recovers, more and more people return back to work and football stadiums fill up once again. But why is this headline important and what does it mean for the currency markets? Judging by this morning's reaction to the data there hasn't been too much of a response in Sterling but that doesn't mean we won't see the effects of this further down the line. The headline, inflation rate jumping to 1.5% in 12 months, is not far off the Bank of England's target rate of 2%. Whilst it seems unlikely that the Bank of England will raise rates very soon, inflation picking up does reduce the risk further that interest rates will turn negative at some point.

For the time being, GBPUSD and GBPEUR are rangebound this morning, with the euro in particular gaining some ground against the pound yesterday.

Key Movers

This Euro’s gain is reflective of the moves we are also seeing on EURUSD which is testing new highs every day. This euro strength could be underpinned by Friday's raft of PMI data from the Eurozone which will provide the latest health check of the European wide economy. Before that though we have today's ECB Financial Stability report.

The US dollar woes continue however across the waters and not only is the dollar trading at a 3 month low against the euro but it has also dropped to a six year low against the Canadian Dollar as well. Tonight's Federal Reserve minutes may provide some respite for the dollar if the minutes show that the Fed could respond sooner rather than later to rising price pressures.

Expected Ranges

GBP/USD: 1.4080 - 1.4200 ▲

GBP/EUR: 1.1580 - 1.1650 ▼

GBP/AUD: 1.8180 - 18260 ▲

EUR/USD: 1.2130 - 1.2240 ▲