- Pound (GBP) slipped despite surging UK inflation
- Indian covid variant spreads rapidly but vaccine is effective
- Euro (EUR) trades mixed versus major on USD strength & weak data
- Eurozone inflation underwhelmed
The Pound Euro (GBP/EUR) exchange rate is holding steady on Thursday, trading just a few pipis lower. The pair settled lower -0.1% on Wednesday at €1.1591, after dropping as low as €1.1569. At 05:45 UTC, GBP/EUR trades -0.02% at €1.1589.
The Pound came under pressure on Wednesday despite stronger than forecast UK inflation data. Consumer prices doubled in April to 1.5% year on year, up from 0.7% in March. The reading was also ahead of the 1.4% forecast by analysts.
Inflation shot higher amid as rise in oil prices forcing up prices at the pumps. A rise in household energy bills also added upward pressure on consumer prices.
With the UK economy re-opening, indoor hospitality re-starting and travel picking up, the Bank of England expects consumer prices to continue rising to beyond the central bank’s 2% target by the end of the year.
The strong inflation data came hot on the heels of better than forecast UK labour market data and as the UK eased lockdown restrictions further.
There is no high impacting UK data due to be released today. Investors will be watching covid numbers cautiously as the Indian variant continues to spread rapidly. Early evidence suggests that the covid vaccine protects against this mutation.
PMI data and retail sales are due on Friday.
The Euro also traded broadly under pressure in the previous session on US Dollar strength, although the common currency gained versus Sterling.
Inflation numbers were also in focus in the Eurozone. Consumer prices rose 0.5% month on month in the region, below the 0.6% forecast and down from 0.9% in March. On an annual basis, core inflation which strips out more volatile items such as food and fuel, also came in short of forecasts at 0.7%.
The Eurozone economic calendar is also very light tomorrow leaving sentiment and covid updates in the driving seat ahead of PMI data on Friday.