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UK Inflation Pressures Send GBP Exchange Rates Lower

Categories: AUD, CAD, EUR, GBP, Markets, News, NZD, USD


GBP/USD 1 Week Chart

The Pound (GBP) slipped against the majority of its peers on Tuesday as the UK’s latest CPI data showed that inflation skyrocketed last month.

According to the ONS, inflation jumped from 2.3% to 2.7% in April, outpacing initial estimates that it would rise to 2.6%. While an uptick in inflation is usually welcomed by investors, there are fears that consumer spending will come under pressure if it continues to run hot, especially as the Bank of England (BoE) has indicated that it is willing to overlook the rise in inflation for the time being.

Sterling is likely to slide again this morning if the UK’s latest wage data shows that the gap between inflation and pay growth is becoming wider.


The Pound Euro (GBP EUR) exchange rate slipped by almost a cent yesterday as markets worried that a potential fall in consumer activity in the UK could hamper economic growth.

Meanwhile the Euro was strengthened by an uptick in German Economic Sentiment, which rose from 19.5 to 20.6 in May, its highest reading since August 2015.

The single currency may advance again later this morning as the final Eurozone CPI reading for April is expected to report that inflation climbed from 1.5% to 1.9%, putting it just shy of the European Central Bank’s (ECB) target rate of 2.0%.

US Dollar

Sterling fluctuated against the US Dollar (USD) on Tuesday as markets grew increasingly concerned by the conduct of Donald Trump.

While the pairing’s early losses were cut short by the rapid acceleration of the UK’s inflation figure, the Pound rebounded overnight as it emerged that Trump had attempted to get former FBI head James Comey to halt an investigation into Michael Flynn, Trump’s former national security advisor.

This followed reports earlier in the day that Trump had given highly classified data to Russia, with many in Washington calling for a thorough investigation into the President.

Canadian Dollar

The Pound Canadian Dollar (GBP CAD) exchange rate tumbled almost half a cent in trading yesterday as oil prices continued climbing higher following the announcement from Saudi Arabia and Russia that they would support an extension of oil production cuts into next year.

However, the ‘Loonie’ could slip this afternoon if US crude stocks rose as expected last week.

Australian Dollar

After stumbling yesterday Sterling trended higher against the Australian Dollar (AUD) overnight as domestic Consumer Confidence slipped from 99 to 98, with Australians being particularly worried about the state of the housing market.

New Zealand Dollar

The Pound New Zealand Dollar (GBP NZD) exchange rate struggled to advance yesterday as the pairing was pressured by inflation concerns and yet another rise in prices at the Global Dairy Auction yesterday afternoon.

TorFX Author: TorFX

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