Noticias
19 Aug 2015

UK CPI experiences short lift

The sterling was the main mover yesterday, due to core and headline CPI rise above expectations. However this is expected to fall in proceeding months as other factor are accounted for. 

 

Pound Sterling

 

GBP/USD jumping up to the $1.57 level after having started the day sub $1.56. Likewise, the boost to sterling from the inflation data saw EUR/GBP fall back below 71p, trading as low as 70.3p

 

The Bank of England says interest rates moves are not expected in the short term. Mark Carney is taking a similar stance to Janet Yellen, as he will make a data dependent decision on raising interest rates. Therefore, every piece of news is seen as having a bearing on whether interest rates will go up in late 2015, early 2016 or later.

 

The latest cost of living figures were slightly stronger than expected; headline consumer prices index was 0.1% in July, up from 0.0% in June. Core inflation, which strips out volatile items such as food and energy, rose from 0.8% to 1.2%.

 

Currently this morning the Pound trades at $1.56721.

 

Dollar

 

The key dollar event of the week with the Fed July meeting minutes due out (after close in Europe) as well as July CPI data. The text of the minutes will be dissected as the market tries to assess the potential for a rate hike as early as next month. If the minutes suggest that the Fed is leaning towards hiking sooner rather than later, then we could see the dollar benefit. 

 

This morning the cable trades at £0.63786.

 

Euro

 

German Finance Minister Wolfgang Schaeuble has publicly stated that ‘it would be irresponsible not to use the opportunity for a new start in Greece’ as the Greek government has voted through most of the necessary reform legislation.

 

Today the German parliament will vote on the third Greek bailout. Approval of the latest emergency rescue plan is assured given the 504 seats Merkel's left-right "grand coalition" holds in the 631-seat Bundestag lower house.

 

A small shadow of opposition is appearing as 60 of the 311 members in Merkel’s parliamentary group voted against opening negotiations with Greek officials. 

 

The Euro opens today at £0.70492.

 

Aussie

 

Generally the Aussie is considered a gauge of liquidity plays for China, eased 0.1 percent to $0.7333 and touched a one-week low of $0.7314 at one point.

 

Current the Aussie trades at $0.73546.

Currently the Aussie is caught between the two largest economies ebb and flows. This is mostly due to last weeks actions by Beijing to allow the Yuan float slightly as it bets on the timing of the US interest rate rise.

 

In late trade on Tuesday the Aussie was fetching US73.33¢ after sinking as low as US73.14¢. The fall followed China's share market down, which tumbled for a second day and shed as much as 4 per cent during the morning trading session after Tuesday's 6 per cent fall.   

 

 Stay up to date with the latest exchange rates in real-time on our Live Exchange Rates page or talk to one of our foreign exchange specialists on how we can help protect your business from large fluctuations in the currency markets.