- UK inflation hits six month high
- Euro continues weaker
- GBP moved back below the key 1.30 level today after data showed inflation hitting a six month high. Markets now expect that interest rates will not be cut now any time soon. Consumer prices rose more than expected at an annual rate of 1.8% compared with 1.3% in December.
The pound which had traded below the $1.30 mark in early London trade, rose back into positive territory after the data and stood at $1.3017, up 0.16% on the day. Versus the euro, the pound had started the day down 0.25% but rose back to trade flat against the single currency.
- On Tuesday, Germany’s ZEW research institute said in its monthly survey that investors’ mood deteriorated far more than expected in February, on worries the coronavirus would dampen world trade. The survey added to expectations the German economy will lose more momentum in the first half as slumping exports keep manufacturers mired in a recession.
- The euro has lost around 3.7% of its value against the U.S. dollar this year, its worst year-to-date performance in five years.
- Speculators increased their net long dollar position in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. Fears over coronavirus as well as safe haven buying has kept the dollar strong at the start of 2020.