Pound Rallies on Upbeat UK Inflation Data, Declines on Brexit News

The  Sterling pound today rallied higher against the  US dollar following the  release of  the  latest UK inflation data, which beat expectations by  a  huge margin. The  GBP/USD currency pair today rallied to  new six-week highs following the  positive releases, but later dropped to  new lows due to  negative Brexit headlines.
The  GBP/USD currency pair today rallied to  a  high of  1.3215 in  the  early European session before dropping to  a  low of  1.3098 on  Brexit headlines.
The  currency pair’s rally was triggered by  the  release of  the  UK consumer price index data for  August by  the  Office for  National Statistics. The  headline CPI prit came in  at  a  monthly 0.7% beating expectations set at  0.5%. The  annual figure was recorded at  2.7%, which was higher than the  expected 2.4%. The  core CPI print came in  at  an  annualized 2.4% beating expectations by  0.3%. The  upbeat inflation data triggered a  surge to  new 6-week highs for  the  cable. The  retail price index and  the  producer price index for  August were also released at  the  same time, but had a  muted impact on  the  pair.
The  upbeat CPI data also raised investor expectations of  fast rate hikes by  the  Bank of  England. The  pair dropped to  new lows in  the  mid-European session following fresh Brexit headlines indicating that Theresa May was set to  reject an  improved offer from the  EU regarding the  Irish border.
The  currency pair’s short-term performance is likely to  be affected by  Brexit headlines and  US releases.
The  GBP/USD currency pair was trading at  1.3132 as  at  12:19 GMT having dropped from a  high of  1.3215. The  GBP/JPY currency pair was trading at  147.42 having declined from a  high of  148.54.

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