The pound remained steady following high inflation data which saw a reading of 3.2% in August compared to 2% in July. The posted number was above the predicted 2.9%, which has reinforced hawkish views from the Bank of England in regards to Rate hikes in early 2022.
GBP/USD currently resides around 1.3820, however should the BOE hawkish views continue we could see the pound rise across the board later this year. GBP/EUR also remained range bound between 1.1688 & 1.1730
The pound would have normally made immediate gains after the hawkish views from the BOE, however any gains were brushed aside due to Brexit concerns as the UK postponed the introduction of post-brexit checks on imports to England, Scotland and Wales, pointing towards COVID-19 and global supply chain disruptions.
In Politics Prime Minister Boris Johnson made changes to his Cabinet in which, Liz Truss will be given Foreign Secretary, and Dominic Raab will become Justice Secretary. Robert Buckland, Robert Jenrick and Gavin Williams will leave the Cabinet office.
EUR/USD has dipped back below 1.18 and currently resides around 1.1770, and eyes will be fixed on Lagarde’s speech this week along with and final August CPI figures on Friday. There are a few other events which could cause volatility in the Eurozone, mainly cited around political uncertainty toward the EU Recovery Fund and German elections on 26th September.