Exchange Rates Outlook: Pound Sterling Gains vs EUR, USD, AUD & NZD on UK CPI Inflation Data

Modified: Tuesday, 13 November 2012 10:11 BST - Written by Tim Boyer

STORY LINK Exchange Rates Outlook: Pound Sterling Gains vs EUR, USD, AUD & NZD on UK CPI Inflation Data

This morning’s UK CPI inflation numbers have thrashed expectations, showing a pronounced uptick from September’s showing of an annualised 2.2% to print at 2.7%. The figure is well ahead of the UK government’s official inflation target of 2.0% and shows that Britain is still suffering from recent persistent price rises in global commodities markets. It appears likely that the Bank of England’s ongoing Quantitative Easing programme has added further fuel to the UK’s inflationary flames, a fact which will not go unnoticed by the BoE’s nine-man Monetary Policy Committee who will now be reticent to vote in favour of further QE in the near-term.

The Pound has registered healthy gains across the board in the aftermath of the figure, with the GBP ERU exchange rate climbing from an intra-day low of 1.2483 to trade as high as 1.2541. Sterling has made gains of a slightly lesser magnitude against the USD, AUD and NZD.

Elsewhere, the eurozone Finance Ministers’ summit in Brussels continues today. A preliminary document released by the group has recommended that Greece should be given an additional two years to comply with stringent budgetary targets which have been imposed upon it. It is unclear how such an extension will go down with Germany, whose policymakers have consistently argued against leniency for the debt-addled Hellenic state. Market participants will be wary of any fissure between the eurozone’s leading economic superpower and struggling Southern states. Any hints of such a scenario would heap pressure on the single currency, potentially threatening a move back up into the high 1.20s once again for the GBP EUR exchange rate.

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TAGS: Daily Currency Updates Euro Forecasts Euro Pound Forecasts Pound Eu Forecasts