UK Inflation Hits 8-Month High
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Daily Currency Update
UK inflation accelerated to 2.6% in November, reaching its highest level in eight months and matching economists’ forecasts. This marks an increase from 2.3% in October, according to data from the Office for National Statistics.The core inflation measure, excluding volatile components like food and energy, edged up to 3.5% from 3.3%, although slightly below expectations.
The data is unlikely to sway the Bank of England, which is widely anticipated to hold interest rates steady at 4.75% in its upcoming decision. However, the persistence of inflation above target levels has sparked caution in FX markets. Sterling held firm as traders scaled back expectations of rate cuts in 2025, signalling potential support for the currency in the near term.
Key Movers
The U.S. dollar remained steady on Wednesday as traders awaited the Federal Reserve's rate decision amid speculation of a "hawkish cut," setting the tone ahead of key central bank meetings this week.The Fed is widely anticipated to announce a 25-basis-point rate cut after its two-day policy meeting, with markets pricing in a 97% probability to the move.
Investor attention is centred on the Fed's updated economic projections for 2025, which will accompany the decision. Markets are keen to assess how much further policymakers anticipate reducing rates in 2025, a critical factor shaping FX market sentiment.
Expected Ranges
- GBP/USD: 1.2645 - 1.2715 ▼
- GBP/EUR: 1.2065 - 1.2135 ▲
- GBP/AUD: 1.9965 - 2.065 ▲
- EUR/USD: 1.0445 - 1.0525 ▼