Kantox currency update: UK inflation boosts the pound to one-year highs
The pound sterling broke above 1.3250 high on Tuesday buoyed by a strong acceleration of UK Consumer Prices Index, which adds pressure for the Bank of England to tighten its monetary policy, ahead of their Thursday’s meeting.
The dollar remained little moved against the euro on a calm trading session and advanced further against the Japanese yen, buoyed by the improvement in market sentiment as fears about North Korea and the effects of Hurricane Irma recede.
EUR/USD reversal supported above 1.1900. Euro pullback from 2, ½ year highs near 1.2100 have been contained so far above 1.1900, and the pair picked up during the latest sessions, to approach 1.2000 area. At London market opening times, the EUR/USD is trading at 1.1975.
GBP/USD rally extends beyond 1.3300 after UK CPI. The pound has surged more than 4% against the dollar over the last two weeks, to reach its highest levels in the last 12 months after a strong acceleration in the UK CPI, which might force the BoE to abandon its dovish stance and start considering an interest rate hike. At London market opening times, the GBP/USD is trading at 1.3310.
USD/JPY returns above 110.00. The dollar appreciated on Tuesday for the second consecutive day against the yen, amid a more positive market sentiment to extend its recovery from last week lows at107.30, to one-week highs above 110.00. At London market opening times, the USD/JPY is trading at 110.05.
In the Calendar Today
At 08:30 GMT the UK ILO unemployment rate and the average earnings will show the momentum of the UK labour market and might have a minor impact on pound volatility.
At 10:00 GMT Eurostat will release the Euro Zone industrial production. After a disappointing decline seen in June, another downbeat reading in July might have a moderately negative impact on the euro.
08:30 GMT UK: ILO unemployment rate (3M) (Ago)
Prev: 4.4% Cons: 4.4%
08:30 GMT UK: Average Earnings excluding Bonus (3M) (Ago)
Prev: 2.1% Cons: 2.2%
10:00 GMT EZ: Industrial Production (M/M) (Jul)
Prev: -0.6% Cons: 0.1%