US inflation hold the headlines
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Daily Currency Update
Market announcements on Thursday revealed that U.S. consumer price inflation (CPI) for September came in hotter than expected. Both core CPI and overall CPI remained unchanged month-on-month, while year-on-year CPI declined by 0.1%. However, the actual figure of 2.4% missed the forecast of 2.3%. A breakdown of the data highlighted rising food costs as a contributing factor to stagflation concerns. Simultaneously, employment data showed a sharp rise in jobless claims to 258,000, further dampening market sentiment.These developments have cast doubt on predictions that the Federal Reserve will cut interest rates by 50 basis points, or even 25, by the end of the year.
The uncertainty has fueled volatility in the currency markets. The USD saw fluctuations in the past 24 hours, with GBP/USD touching a session low of 1.3200 following the announcements, before recovering to 1.3080. EUR/USD also tested the 1.0900 level but failed to break through, with the pair recovering to 1.0950 this morning.
Key Movers
Data released this morning showed that Britain's economic output grew by 0.2% in August, following two months of stagnant growth. While this figure was in line with expectations, it suggests slow economic growth rather than an impending recession.
Later today, more inflation data from the U.S. will be released, specifically the Producer Price Index (PPI). A 0.1% decline is expected in both the core PPI and overall PPI on a month-on-month basis.
Expected Ranges
- GBP/USD: 1.3020 - 1.3110 ▼
- GBP/EUR: 1.1910 - 1.1970 ▼
- GBP/AUD: 1.9320 - 1.9480 ▼
- EUR/USD: 1.0910 - 1.0980 ▼