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US CPI causes dollar to weaken

Daily Currency Update

GBP/USD reached 2-month highs on Wednesday afternoon as the US dollar slipped on the back on poor CPI data. The pound is now trading above $1.37 against the US dollar for the first time since the end of October. In other news, UK Prime Minister Boris Johnson accepted responsibility for the party the government held back in May and was urged by multiple members of the opposition to resign. The resignation is now looking less likely; however, the pound did not really react to these allegations or notions of Boris Johnsons’ resignation.

Later today, UK Foreign Secretary Liz Truss enters the next round of post-Brexit negotiations over Northern Ireland. Depending on the outcome, any positive progress could benefit the pound.

Key Movers

Inflation was the key story for the FX markets on Wednesday as worse-than-expected US CPI figures weakened the US dollar. It caused GBP/USD to rally from $1.3640 to $1.3750 on the news. The CPI figure came out at 7%, which is the highest number it has been since the 1980s.

Expected Ranges

  • GBP/USD: 1.3680 - 1.3825 ▲
  • GBP/EUR: 1.1945 - 1.2050 ▲
  • GBP/AUD: 1.8730 - 1.8940 ▲
  • EUR/USD: 1.1380 - 1.1535 ▲