The British pound (GBP) is higher against the euro (EUR) on Wednesday.
- UK CPI tops expectations but remains well under the BOE target
- Euro hits 4-month high over dollar, pulls back versus pound
- Oxford vaccine reports bolster Sterling and stock markets
- Apple wins court case over $14.9 billion EU tax bill
GBP/EUR was up by 30 pips (+0.10%) to 1.1037 as of 3pm GMT. This week it is lower by -1.22%.
The currency pair held 1.10 early on and drifted up to 1.105 in a corrective move higher following two days of steeper selling.
GBP: Pound gets relief bounce after CPI higher
There was some relief from the prior two days of selling the pound on Wednesday. Better UK inflation data and a risk-on market environment thanks to vaccine developments (today’s in the UK) helped bolster sentiment.
UK June CPI was 0.6% versus the 0.4% expected. It’s still way off the 2% target set by the Bank of England but does relieve some of the pressure on the BOE to add stimulus at the next meeting. That said, Monetary Policy Committee (MPC) Member Silvana Tenreyro commented today that she was willing to vote for further policy action as necessary.
EUR: Apple wins EU court case
A report from ITV’s Robert Peston that the Oxford Covid-19 vaccine that has been backed by AstraZeneca is set to report good results in its latest trials added to optimism across markets – but also to the pound, where it might be assumed the UK government would have first access.
US dollar outflows and optimism about recovery fund also bolstered the euro, with EUR/USD striking a 4-month high but the British pound got the edge after a two-day sell-off.
News that Apple had won its court case with the European Union over its decision to impose a $14.9 billion tax bill that would be paid to Ireland may have contributed to the euro weakness. It’s a setback for lawmakers who had been trying to crackdown on sweetheart tax deals in member countries.
