Sterling gains against euro but loses to US dollar

Story link: Sterling gains against euro but loses to US dollar

Sterling gained ground against the euro on Tuesday, held its own against the yen, but fell slightly in relation to the US dollar. Consumer price inflation in the UK was reported to be up to 2.3 percent in July, above the forecast level of 2.1 percent, after sitting at 2 percent in June. Part of the reason for the rise was the hike in crude oil prices above $66 per barrel.

However core inflation, which does not include energy and food, was up to 1.8 percent in July. It had been at 1.5 percent in June. Additionally, service sector inflation was up to 4.5 percent, its highest in two and a half years. The new inflation figures make it less likely that UK interest rates will be cut again this year.

Sterling gained 0.2 percent to £0.6812 in relation to the euro, and it sat steady against the yen at ¥197.74 and slightly down in relation to the US dollar at $1.8090.

The dollar also gained value in relation to the euro and the Swiss franc as the consumer price index in the US was up 0.5 percent in July, when a rise of 0.4 percent had been expected. Core price inflation, however, was up by 0.1 percent. Industrial output grew far less than predictions, gaining only 0.1 percent.

Analysts believe this data will do nothing to change the Federal Reserve’s program of interest rate hikes. The dollar gained 0.3 percent to $1.2333 in relation to the euro, while it was also up by 0.3 percent to SFr1.2582 against the Swiss franc.

The yen rose against the US dollar, gaining 0.2 percent to ¥109.04, on optimism about Japan’s economic recovery. Meanwhile, the Brazilian real lost 0.3 percent in relation to the US dollar after having gained 1.3 percent against the greenback on Monday.