Home Daily Commentaries Focus now leads to UK inflation data next week

Focus now leads to UK inflation data next week

Daily Currency Update

UK inflation is now in focus and is expected to continue its downward trend for May's report, mirroring the recent moderation seen in US inflation. This would bring the UK closer to its 2% target, with a particular focus on the anticipated decline in services sector inflation.

In April, services inflation remained elevated at 5.9% and wage growth was robust at 5.7%. These factors prevented the Bank of England (BoE) from adopting a dovish stance in May, leading markets to delay their expectations for the timing of the first Bank Rate cut. Traders are closely watching these indicators to gauge the future direction of BoE policy.

Key Movers

The US dollar recovered against a basket of currencies on Thursday, overcoming a soft US producer price inflation report for May, following the Federal Reserve's hawkish stance on Wednesday.

A softer-than-expected US Consumer Price Index (CPI) report for May which had initially triggered a sharp sell-off in the USD. Despite this, the Fed's hawkish tone provided support to the dollar, offsetting the impact of the weak inflation data.

Expected Ranges

  • GBP/USD: 1.2685 - 1.2765 ▲
  • GBP/EUR: 1.1865 - 1.1905 ▲
  • GBP/AUD: 1.9205 - 1.9285 ▲
  • EUR/USD: 1.0655 - 1.0735 ▼

Written by

See Wah Li


See Wah is passionate about supporting positive transformations when it comes to managing foreign exchange. As a Senior Currency Consultant at OFX, his goal is to help businesses make informed decisions, alleviate risks, and enhance their currency strategies for success. With over 6 years of experience in the foreign exchange market, See Wah’s strength lies in developing effective solutions to help navigate the complexities of currency fluctuations and mitigate their impacts on business profitability.