Sterling
Sterling was on the front foot yesterday, benefitting from the release of a decent set of labour market data. The currency has received a further boost this morning from a strong set of UK CPI inflation figures for August, with the headline rate surging to 3.2% y o y from 2% in July.
To an extent, the increase in UK inflation reflects base effects associated with last years’ Eat Out to Help Out scheme, which temporarily pushed hospitality prices lower in 2020. However, on an underlying basis, inflationary pressures remain robust, reflecting tightness in labour markets and the persistence of significant supply-side issues.
Dollar
US CPI data for August was also released yesterday, with the YOY rate of inflation easing slightly to 5.3% from 5.4% on the back of a sharp decline in used car prices. This initially coincided with some modest dollar weakness, though the move was not sustained.
In level terms, GBP/USD is trading this morning back in the upper half of the $1.38 1.39 range, while EUR/USD remains pinned at the $1.18 threshold. At the same time, GBP/EUR has pushed back up toward the midpoint of the €1.17 1.18 range.
Looking Ahead
Looking to the day ahead, there is little else out to influence currency markets, suggesting the action could be contained to a relatively tight range.
This blog post is intended to provide you with information on the services Lumon Pay Ltd (“LPL”) offer and should not be interpreted as advice or as a solicitation to offer to buy or sell any currency or as a recommendation to trade. Foreign exchange rates provided therein are for indicative purposes only and are not intended to give an accurate reflection of current currency exchange rates or to predict future movements in currency exchange rates. LPL, trading as Lumon, is a company registered in England with its registered address at Building 1, Chalfont Park, Gerrards Cross, Buckinghamshire SL9 0BG. LPL is authorised by the Financial Conduct Authority as an Electronic Money Institution (FRN: 902022).