Despite Sterling showing some resilience yesterday to surpass the 1.4100 handle yesterday. The Great British Pound rose to 1.4132 after the upbeat inflation data. However, all gains evaporated towards the end of the session. The UK Consumer Price Inflation (CPI) jumped 2.1% in May, exceeding the Bank of England’s (BOE) target of 2%. Not only this, a stronger Dollar capped any further gains for the pair and pushed GBPUSD below 1.4000. The reason for the Greenbacks’ upside was investors rushing “to the US dollar after the Fed strongly raised its projections for inflation in 2021. The Central bank’s hawkish view lifts the demand for the greenback.” In regard to US treasuries, The US 10-year benchmark yields stood at 1.58%, after rising as high as 1.59% from the lows of 1.48%.
As for GBPEUR, the exchange rate is set to advance for a second straight session. The pair settled +0.45% higher on Wednesday, with a the high of the day of 1.1675, a level last seen in early June. The Pound jumped higher on Wednesday after data revealed an inflation surge May. Inflation, as measured by the CPI, rose 0.6% month on month in May, up from 0.3% in April and double the 0.3% level that analysts had anticipated. On an annual basis, CPI rose to 2.1%, up from 1.5% in April and ahead of the 1.8% forecast. This explicitly indicates that inflation is above the Bank of England’s 2% target, raising the chances of the central bank tightening monetary policy.
GBPUSD opened Wednesday at 1.4093 and closed the day at 1.4103.
GBPEUR on the other hand, made subtle gains in light of the UK’s positive CPI readings. The pair started at 1.1620 and closed at 1.1638
EURUSD made a loss yesterday opening at 1.2129 and closing at 1.2111.