EURGBP Inches Higher After UK and European Inflation Release
The EURGBP exchange rate was 0.04% higher on Wednesday after the UK saw inflation come in slightly higher than expected. The market is now turning its attention to the EU number as the price pressures remain the same despite the UK reopening.
The EUR to GBP rate is trading at 0.8618 with the release of the Eurozone data.
UK inflation doubles as economy reopens
The UK saw higher inflation numbers as the economy reopened and the UK saw a shortage of Cadbury flakes due to the better weather.
“Inflation has doubled, with price rises occurring in key areas where it’s hard for consumers to control spending, namely transport, clothing, and household energy.
Those with a sweet tooth will also be perturbed to learn the price of chocolate bars and ice creams is on the up, particularly in a year when travel restrictions mean getting moderately beach fit is no longer a top priority,” an analyst for AJ Bell said.
Geoff Tily, Senior Economist at the TUC said in a Tweet:
CPI to 1.5% in April from 0.7% in March. As expected. Driven by clothing, utility bills and petrol. Still well below target. Underlying or core inflation (purple) up to only 1.3%: wholly in line with outturns over past year. Danger is inadequate gov. stimulus, not inflation.”
Traders were hoping for a faster move on inflation that could’ve pressured the BoE to unwind its stimulus at a quicker pace, but they will have to wait for subsequent releases, which will mark the full reopening, if it goes ahead.
PwC said:
“After 12 months of subdued inflation, the Consumer Price Index rose by 1.5% in the year to April, doubling from 0.7% in March. The annual rise in inflation largely reflects an increase in prices from their low levels a year ago at the start of the pandemic.”
EU inflation also hits expectations
The European inflation numbers also came in as expected but are showing a sharp increase despite the ongoing lockdowns and that is seeing the pound slightly weaker.
GDP numbers for the EU were also in line with expectations yesterday, while the economy in the UK was boosted by stronger hiring with a return to the services sector establishments in the recent reopening.
The Eurozone economy was also boosted by a report from ratings agency Moody’s, which said that the economy could see a cut to debt levels in Southern Europe.
The agency pointed to the European Union recovery funds for the move, saying:
Greece, Italy, Portugal and Spain to receive nearly half of all grants and loans in EU recovery fund. Along with regular EU funding, the associated investment will lift growth, reduce debt and improve debt affordability.”
The EURGBP trade in the middle of the recent trading range between the 0.8700 bounce highs and the 0.8500 yearly low are in the euro to pound rate.
The post EURGBP Inches Higher After UK and European Inflation Release appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/05/eurgbp-inches-higher-after-uk-and-european-inflation-release/
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