Price of the pound, inflation, news, and analysis: The UK inflation data for June came in above economists’ expectations on Wednesday, helping the GBP/USD pair recover from Tuesday’s loss following US inflation data that also exceeded expectations. However, the impact of the UK CPI (consumer price index) numbers has been mitigated by weaker than expected UK PPI (producer price index) data, which suggests that inflation may soon begin to fall, putting pressure on the GBP.
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Following the release of UK inflation figures, the GBP/USD exchange rate improves.
The main consumer price index rose 2.5 percent year on year in June, above both the previous 2.1 percent and the forecasted 2.2 percent, according to UK inflation figures released Wednesday. This aided the recovery of the GBP/USD, which had fallen on Tuesday as a result of higher-than-expected US inflation data. Calendar from DailyFX See how CPI data affects currency prices here. However, the impact of the current data was mitigated by lower-than-expected producer price index numbers, implying that CPI inflation could soon revert as lower-than-expected input costs and factory gate prices make their way into stores. Following a significant drop Tuesday on news of higher-than-expected US inflation, the initial reaction in GBP/USD to the latest numbers was a recovery. However, given the PPI statistics, there could be some limited downside ahead, reopening the issue over whether global inflation is temporary or already anchored in the global economy. The answer, at least in the UK, could be transitory based on these figures. Ten-Minute Timeframe GBP/USD Price Chart (July 13-14, 2021) IG is the source. (You can enlarge it by clicking on it.) The mood, however, could shift again. The next UK data release is the jobs report on Thursday, and if it shows that average salaries are continuing rising, GBP/USD might rise. —- Martin Essex, Analyst, penned this article. Please feel free to contact me at @MartinSEssex on Twitter.
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