UK CPI Climbs, British Pound to Euro, US Dollar and the Australian Dollar Exchange Rates Rise
The British Pound put on a mixed performance yesterday, with the currency gaining on the American Dollar exchange rate off the back of slightly dovish FOMC meeting minutes but losing ground against the Euro rate after Germany approved the Greek bailout.
How the Pound acts today largely depends on the UK's retail sales report. An uptick in consumer spending would be Sterling-positive.
Earlier...
The Pound made significant gains against the majors on Tuesday, rising through 1.42 versus the Euro and charging towards 1.57 against the U.S Dollar. The latest UK inflation data showed an unexpected increase to 0.1% in July, which was above market forecasts for a fall into negative territory in July. The retail prices index measure of inflation was unchanged at 1%, a figure that will be used to calculate rail fare increases next year. There was also a larger increase in core inflation, which has rekindled speculation that the Bank of England will look to raise interest rates earlier-than-expected. Consumer price inflation has been flat for the past six months, having turned negative in April for the first time since 1960 and the market had priced in a return to -0.1%, after a reading of zero in June.
A quick foreign exchange market summary before we bring you the rest of the report:
On Saturday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
FX markets see the pound vs pound exchange rate converting at 1.
The pound conversion rate (against canadian dollar) is quoted at 1.701 CAD/GBP.
The pound conversion rate (against australian dollar) is quoted at 1.928 AUD/GBP.
The GBP to USD exchange rate converts at 1.237 today.
Please note: the FX rates above, updated 20th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
Exchange Rate ALERT: Commodity Price Shifts Impact GBP to NZD, AUD, CAD Trading
There is still a good chance that the inflation rate will turn negative again, partly due to the drop in the price of oil, which slumped by almost a quarter in the past two months. Brent crude has dropped below $50 a barrel and China is potentially now introducing a new wave of deflationary measures through the devaluation of its own currency that will have a downside impact on inflation. The Pound was up almost 2% against the Australian Dollar at one point on Tuesday and made gains towards 2.39 versus the New Zealand before losing momentum. Bank of England policy maker David Miles told BBC Newsnight yesterday that interest rates will rise “pretty soon”, as he prepares to leave the MPC this month.
FX Predictions: BoE Comments to Keep Pound Sterling Exchange Rate Supported
Miles voted to keep rates on hold in August but he remained optimistic about the outlook for the UK economy and that a rate increase would be a sign of health. His comments comes just two days after his fellow MPC member Kirstin Forbes warned that waiting too long to raise interest rates risked undermining the UK’s economic recovery. In August, the MPC voted 8-1 in favour of a no change and there was a sense of disappointment at the time that only one member had broken ranks. Nonetheless, the comments over the past few days from Forbes and now Miles would indicate that the balance is beginning to shift and more policy makers could be about to change their vote and recommend an increase.
Data Released 19th August 2015
EU 09:00 Current Account (June)
U.S 13:30 CPI (July)
- Ex Food & Energy
U.S 19:00 FOMC Minutes from 28th – 29th July Meeting Published