GBP slides after soft inflation data
Daily Currency Update
Sterling came under fresh selling pressure early this morning after UK CPI rose 3.8% year-on-year in September, missing the expected 4.0%. The downside surprise keeps Bank of England rate-cut expectations firmly in play, adding to the downward drag on the currency. GBP has slipped more than half a cent against both the Euro and the US Dollar, trading near 1.1480 and 1.3225 respectively at the time of writing.
The Pound extended its gradual decline against the US Dollar on Tuesday, as traders remained cautious ahead of today’s UK inflation release. Sentiment was further dampened by data showing UK government borrowing in September reached its highest level for the month in five years, overshooting expectations by £7.2 billion in the first half of the fiscal year.
Key Movers
The US Dollar remains resilient, edging modestly higher against major peers despite uncertainty stemming from the prolonged government shutdown and delays to key economic data releases, including Nonfarm Payrolls. The lack of fresh data has left markets and the Federal Reserve navigating with limited visibility. The shutdown has now entered its fourth week after the Senate failed for the 11th time to advance a funding bill, making it the third-longest in modern US history.
Meanwhile, the Euro traded without clear direction on Tuesday, with little in the way of data to guide markets and none scheduled until Friday. The currency is likely to continue its sideways movement today as the European Central Bank enters its pre-meeting blackout period ahead of next week’s policy decision. Traders will watch remarks from ECB President Christine Lagarde (13:25 UK time) and Vice President Luis de Guindos (12:00 UK time) closely for any hints about the central bank’s next move on monetary policy.
Expected Ranges
- GBP/USD: 1.33 - 1.335 ▲
- GBP/EUR: 1.146 - 1.15 ▼
- GBP/AUD: 2.056 - 2.062 ▲
- EUR/USD: 1.158 - 1.162 ▲