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US CPI data to hold headlines

Daily Currency Update

Macroeconomic data has been minimal in the past 24 hours, with currency taking direction from news headlines and the data releases due later this week. One of these key releases will be coming from the US today, with the Consumer Price Index year-on-year finally expected to fall from its multi decade high of 9.1% down to 8.7%. Despite the expected fall, this isn’t likely to change the Fed's stance on future interest rate hikes, as the Federal Reserve battles on, to bring inflation down to the 2% target. A fall in the inflation rate may indicate that the US are over the worst of the soaring inflation. GBP/USD continues to trade between 1.2050 and 1.2120 ahead of the release, but this range will likely be broken on the announcement. GBP/EUR has slowly ticked lower since the Bank of England announced a year-long recession, which is expected to start before the end of this year.

Key Movers

Data earlier this morning showed German CPI rose 0.9% on the month in July, falling only marginally to 7.5% on the year, showing that price pressures remained strong in Europe’s largest economy. Despite this release, heavyweight macroeconomic remains light in the Eurozone with energy supplies holding the headlines. CPI data from the US will likely be the main driver on EUR/USD today, and GDP figures from the UK on Friday for GBP/EUR. The first estimate on second quarter growth data is expected to show a quarterly drop of -0.2% and will be an indicator whether the UK economy is heading into a recession. EUR/USD sits back above 1.0200, but has tested a fall below, occasionally, overnight. GBP/EUR trades just above 1.1800.

Expected Ranges

  • GBP/USD: 1.2000 - 1.2220 ▲
  • GBP/EUR: 1.1750 - 1.1890 ▼
  • GBP/AUD: 1.7280 - 1.7470 ▲
  • EUR/USD: 1.0160 - 1.0290 ▲