Created
: 2024.04.17
2024.04.17 21:43
The EUR/GBP edges lower a fraction on Wednesday to trade at about the 0.8540 level, after the release of macroeconomic data from both the UK and Eurozone.
In the UK, inflation rose slightly higher than expected in March, according to data from the Office of National Statistics (ONS), on Wednesday. The Consumer Price Index (CPI) in March rose 3.2% year-on-year when a 3.1% rise had been expected. That said it was below the 3.6% of the previous month.
Core CPI rose 4.2% versus the 4.1% expected reading but was also lower than the previous month. The same was true of the Retail Price Index (RPI) whilst the Producer Price Index showed results either inline with expectations or slightly below them.
The data gave a lift to the Pound Sterling, perhaps because it reduces the probabilities that the Bank of England (BoE) will be able to start reducing interest rates.
"Overall, this is not what the BoE wants to see, in particular after the stronger than expected wage numbers out yesterday," said analysts at TD Securities, responding to the data.
It means the BoE may need to keep interest rates higher for longer in order to combat stickier-than-expected inflation. Higher interest rates tend to appreciate a currency as they lead to higher foreign capital inflows.
EUR/GBP recovered some lost ground following the release of the final estimate for the March Eurozone Harmonized Index of Consumer Prices (HICP), on Wednesday.
The data showed no change from the flash reading, which showed a 2.4% YoY rise in HICP and 2.9% in core HICP. Both readings were still below the 2.6% and 3.1% readings respectively for February.
The Euro (EUR) may have been lifted because market expectations had overall declined in relation to Eurozone inflation. Recent dovish comments from European Central Bank (ECB) officials, have suggested an increasing willingness to cut interest rates because of falling inflation and stuttering growth, and this could have been responsible for the lower outlook.
ECB President Christine Lagarde, for example, said on Tuesday that the ECB will cut rates soon, bar a surprise, and that the ECB was keeping a close eye on Oil prices due to Middle East tensions.
Created
: 2024.04.17
Last updated
: 2024.04.17
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy