Markets await US inflation data

Daily Currency Update

The pound has rallied over the past 24 hours on the back of broad US dollar weakness seen in the markets so far this week with GBP/USD currently trading above 1.17. Sterling has also been buoyed by reports that new UK Prime Minister, Liz Truss, will not be looking to trigger Article 16 of the Northern Ireland protocol that would have seen the removal of the current light touch checks on goods travelling between Northern Ireland and the Republic of Ireland implemented since the UK left the EU. Given the passing of Queen Elizabeth II, and the economic headwinds the UK and the Eurozone are facing, now is not the time to be entering into a confrontation over the issue and its expected that talks will resume at a later date.

UK unemployment released this morning has also shown an unexpected improvement with the rate dropping from 3.8% to 3.6%, its lowest level in 48 years. Despite this positive news the outlook for the UK economy looks uncertain at best. However there is a growing expectation that Liz Truss's support package for household energy bills may avert a deeper recession than previously predicted. There is no data of note from the UK today however tomorrow morning sees the latest inflation data with CPI expected to hold at 10.1%. GBP/EUR is up to around 1.1550.