GBP
The British Pound was higher after it was announced UK inflation hit 10.1% in July smashing expectations by a substantial amount which leaves it more than five times higher than the Bank of England’s target.
The new 40-year high for inflation means another 50 basis point hike from the Bank in September is likely. The Bank of England expects inflation to hit 13.3% in October when the energy price cap is due to rise again, raising household bills for millions of people.
UDS
From a currency viewpoint, the US market updates had no noticeable impact on the dollar. Indeed, most of the FX majors have been confined to fairly narrow trading ranges.
The minutes of the US Federal Reserve’s July policy meeting will be released today. These have been partially superseded by subsequent developments and updated comments from Fed policymakers have already made their latest position clear.
They remain focused on bringing inflation down to target and think further interest rises will be necessary. However, some of the meeting detail may provide new insights.
EUR
Today’s Q2 GDP report for the Eurozone is a second reading. It is not expected to be revised from the initial estimate of quarterly growth of 0.7%.
However, it will provide further details on the drivers of growth. Despite Q2’s upside surprise, ongoing concerns about the Ukrainian crisis and the impact on spending power from high inflation still point to downside risks for growth in the second half of the year.
If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision-making during this difficult time to help you protect your profits.