- Pound (GBP) is flat after 2 days of gains
- UK CPI jumped to 3% YoY in January from 2.5%
- Euro (EUR) is unchanged despite more trade tariff threats
- The economic calendar is quiet
The Pound Euro (GBP/EUR) exchange is unchanged after two days of gains. The pair rose 0.27% in the previous session, settling on Tuesday at €1.2070 and traded in a range between €1.2032 and €1.2070. At 17:15 UTC, GBP/EUR is trading flat at €1.2070.
The pound is unchanged against the euro and is falling against the US dollar despite hotter-than-expected UK inflation data. British inflation accelerated to a 10-month high of 3% year on year in January and could rise further. The CPI inflation print was higher than the 2.8% that economists had been expecting and was up from December’s 2.5% reading.
Delving deeper into the figures the increase in inflation was largely driven by a smaller than usual decline in airfares that month and a rise in petrol prices.
Meanwhile service sector inflation a component that Bank of England policymakers watch closely also jumped sharply to 5% from 4.4% in the previous month but was below the 5.2% that economists had pencilled in. Mother # briefly strengthened it quickly gave up those gains.
The data highlights the struggles the Bank of England faces as it assesses when to cut interest rates again.
The euro is flat against the pound, but it is also falling against the US dollar as investors consider the prospect of trade tariffs of 25% on imports of automobiles, semiconductors, and pharmaceuticals. This news is offsetting optimism surrounding Ukraine peace talks, limiting the upside in the euro.
The latest trade-related tariffs from Trump have added to already jittery market conditions. However, it remains to be seen whether the trade tariffs will be implemented. Even say the threat of it, which could significantly impact the eurozone economy, is sufficient to keep euro buyers cautious for now.
The eurozone economic calendar is quiet, with little for investors to focus on until PMI data on Friday.