At the start of this week the rate experienced some notable upwards momentum, pushing the currency pair out of its recent lows. This, however, has since been cut short, with the Sterling-Dollar rate falling quite sharply so far into trading today. This has predominantly been bought on by the UK’s latest publication of inflationary figures earlier this morning. It was revealed that the UK’s headline inflation rate has soared to 9.1%, its highest in over 40 years amid record prices for petrol and the skyrocketing cost of food. Despite these record breaking levels, the Pound has taken a hit as figures came in at the forecasted levels meaning that markets were left unsurprised. On the other hand, the Dollar will find itself in the spotlight later on today with Federal Reserve Chair Jerome Powell set to start a two-day testimony to congress. Investors are expected to play very close attention to this to see if there will be any clues as to whether the Fed will deliver another interest rate hike of 0.75% in the near future. Should this be the case, the Buck is expected to find itself with renewed strength, likely pushing the rate even lower. As for the Pound, the data front is rather muted for the rest of today, potentially leaving the currency vulnerable to more downside momentum.
The Sterling-Euro rate is currently in a slight downwards trend, with the pair now on track to slip into more losses for its 6th consecutive day. Recent losses have mainly been bought on by the poor outlook for the Pound, with concern that the pair could fall to fresh new lows. This comes following the recent inflationary figures released in the UK, showing 40-year highs of 9.1%. However, this has since weighed on the Pound as these have once again bought on concerns that the Bank of England’s recent actions regarding interest rate hikes have not been sufficient. With the current cost of living crisis in the UK still prevalent, the outlook for the British economy continues to struggle. The Euro, on the other hand, is finding support from the markets outlook for the European Central Bank. The bank, who have been reluctant to raise interest rates, have finally given signals that they will start to look at hiking rates. This comes as inflation in the Eurozone, like many other economies, is at record breaking levels. For trading today, the rate is not likely to print much movement.
Morning Update published by Frank Brightman (22/06/2022)