GBP/EUR Higher as UK Inflation Hits Five-Year High, GBP/AUD, GBP/NZD in Tight Range

17 October 2017 by News Desk   |   SHARE  

The pound sterling exchange rate was trending higher against the euro (GBP/EUR) this morning after the highly-anticipated UK inflation reading rose to 3.0% in September, a five-and-a-half-year high.

The September inflation data is the last consumer price index (CPI) to be released ahead of the November Monetary Policy Committee (MPC) meeting and investors are hoping that policymakers will choose to hike rates for the first time since the Global Financial Crisis (GFC). If the Bank of England (BoE) does decide to increase interest rates this year, the pound could experience another marginal uplift.

While inflation may be at a five-and-a-half-year high, real wages continue to feel the squeeze. Real wages had risen by only 2.1% in July on the year, meaning households are feeling the pinch of higher costs.

Bank of England Governor Mark Carney is also due to speak in Tuesday’s trading and his comments could be of significant influence for the pound. Any hawkish tones could help buoy the British currency, whereas any dovish statements with regards to rates could see GBP soften. If the BoE fails to hike rates by the end of the year, it’s likely that sterling will experience some significant weakness.

Meanwhile, the pound remained in a tight range against both the Australian (GBP/AUD) and New Zealand dollars (GBP/NZD) as markets waited for Mark Carney’s comments.

The GBP/EUR exchange rate is currently trending in the region of 1.1269. The GBP/NZD exchange rate is residing in the region of 1.8446. The GBP/AUD exchange rate is hovering at 1.6870.

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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