Home Daily Commentaries UK inflation remains near 40-year highs

UK inflation remains near 40-year highs

Thursday 19 January, 2023

Daily Currency Update

The UK Consumer Price Index data released yesterday showed while inflation fell to a three-month low of 10.5% in December, it remains near 40-year highs. Specifically, the increase in services inflation and accelerating food and drink prices are a cause for some concern for the Bank of England's policymakers. Coupled with positive employment data from the UK earlier this week, there is increased expectation of a 0.5% rate hike from the UK central bank in their February meeting.

Key Movers

EUR USD hit multi-month highs with optimism for the Euro and the way the European Central Bank now has the wiggle room to raise rates aggressively. Recent economic indicators from the Eurozone have shown the economy is performing better than expected. Today's speech from Cristine Lagarde will be watched for signs of if the central bank is willing to take the measures it needs to bring the inflation bank under control and to its 2% target. Some argue that the Euro has been overbought, with an expectation there could be a retracement in the coming weeks, however, there are some leading banks forecasting the pair could hit 1.15 before the end of March too.

Expected Ranges

  • GBP/USD: 1.2265 - 1.2360 ▼
  • GBP/EUR: 1.1345 - 1.1415 ▼
  • GBP/AUD: 1.7760 - 1.7945 ▲
  • EUR/USD: 1.0765 - 1.0845 ▼