Sterling’s rise continues

GBP

The pound continued its rise against the € for the sixth straight session and was 0.4% higher on Wednesday. It reached a new 20 month high against the € on Wednesday after UK inflation data rose at its fastest pace in a decade. The consumer price index was up at 4.2% in October which was well above Septembers reading of 3.1% beat forecasts of 3.9% doubling the Bank of England’s target for inflation of 2%.

The main contributor continued to be fuel and energy as household bills are being driven up by the lack of supply for gas, electric and Petrol. This follows strong jobs data earlier in the week and has encouraged bets that the BOE will look to raise interest rates in their December meeting. The pound starts the day still trading at the 20 months high against the € with no UK data of note today to dampen the pound.

Euro

The Euro remains under pressure after core inflation in the eurozone was revised down to 2% from 2.1% in the initial October reading. It was marginally higher than Septembers reading of 1.9% while headline inflation remains at 4.1%. The European central bank still continues with its Dovish stance in comparison to other major economies central banks. This is likely to see the € under pressure against is peers most notably the Pound and USD as both central banks are expected to raise interest rates in the near future. The € is set to remain under pressure throughout today as there are no major data releases for the day.

Key Announcements

US Philly Fed Manufacturing Index 1.30pm
US unemployment claims 1.30pm
FOMC Member Williams Speaks 2.30pm
FOMC Member Evans Speaks 7.00pm