After slipping overnight due to increased Brexit uncertainty, the Pound (GBP) is rallying against the majority of its peers this morning as investors await the UK’s latest CPI data.
Economists forecast that the UK’s inflation rate will have climbed from 2.9% to a five-year high of 3% in September, something markets hope will prompt the Bank of England (BoE) to finally begin to tighten monetary policy when policymakers meet next month.
However, another jump in inflation is also likely to raise some concerns over the growing wage gap, with analysts fearing that consumer spending will come under further pressure as households are forced to cut costs.
The Pound Euro (GBP EUR) exchange rate is mounting a recovery this morning as the anticipation of an uptick in UK inflation is helping the pairing rally after dipping yesterday evening.
However the single currency may be able to stall Sterling’s advance later this morning with the release of Germany’s latest Economic Sentiment Index as analysts predict it will have jumped from 17 to 20 this month.
Sterling tumbled against the US Dollar (USD) yesterday afternoon as the Empire State Manufacturing Index surged in October, climbing from 24.4 to 30.2 and beating expectations it would slip to 20.7.
The ‘Greenback’ was also supported overnight by speculation that president Trump may be favouring a hawk as the new Chair of the Fed once Janet Yellen’s term comes to an end early next year.
Meanwhile, the US Dollar may find further gains later today with the release of the latest US Industrial Production figures, with economists forecasting that output will have risen by 0.3% in September, rallying from a 0.9% decline the month before.
The Pound Canadian Dollar (GBP CAD) exchange rate is pushing higher again this morning ahead of the UK’s inflation data after briefly falling last night as the ‘Loonie’ was bolstered by rising oil prices due to tensions in Iraq.
After fluctuating for much of yesterday’s session, Sterling is trending higher against the Australian Dollar (AUD) this morning as the ‘Aussie’ came under pressure from the minutes from the Reserve Bank of Australia’s latest policy meeting – which reiterated that interest rates were likely to remain on hold for the foreseeable future.
New Zealand Dollar
The Pound New Zealand Dollar (GBP NZD) exchange rate initially fell during the Asian session last night as New Zealand’s third quarter GDP beat expectations as it jumped from 0.0% to 0.5%.
However, the ‘Kiwi’ was unable to hold on to its gains as the ongoing political uncertainty in the country continued to drag down the currency.