Following on from yesterday’s gains, the Pound had a relatively positive day.
The morning saw German inflation data come exactly in line with expectation at 0.8%.
UK CPI came in at to 0.5%, a rise from the forecast 0.3%. This is now at its highest since December 2014 but remains well below the Bank of England’s target 2%. The bank also expects inflation to remain below 1%.
The sharp increase in inflation is down to the earlier timing of Easter and the subsequent sharp increase in air fares along with clothing and footwear prices. This figure was somewhat counterbalanced by a smaller rise in petrol prices compared to last year.
As a result, the Pound rose to its highest level in more than a week against USD to 1.43 and 1.2550 against the Euro.
All attention now looks to Thursday’s interest rate decision – where rates are largely expected to remain at 0.5% despite today’s positive inflation figures.
Latest FX news by Joe De Berniere
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