EURGBP Lower with Europe Next Up for Inflation
The EURGBP exchange rate was lower after the release of the latest inflation numbers for the UK and Thursday will see Europe next up for price updates.
argely unchanged on Tuesday morning ahead of the latest German inflation and UK employment numbers. The Prime Minister also confirmed a delay to the UK reopening of four weeks, but that hasn’t hurt sterling. The so-called ‘freedom day’ was pushed back over rising virus case concerns.
The EUR to GBP rate dropped below the 0.8600 level after the UK number and could see further losses.
Boris Johnson secures delay vote
UK Prime Minister Boris Johnson survived a rebellion amongst his own ministers as his lockdown delay vote passed with 461 votes to 60.
Critics in Johnson’s own party are concerned that the goalposts will be moved again in four weeks and sought assurances that it won’t be the case.
Conservative former Cabinet minister Karen Bradley asked the government to “take advantage of the vaccine programme”.
“With a heavy heart, I’m afraid to say to the minister that I cannot support the government this evening, because I cannot find a way to explain to my constituents why the things they are looking forward to getting back to doing have to wait,” she said.
“We have to accept that we cannot save every life – I might have been able to be persuaded if the government was able to support those businesses that are unable to open but that support is simply not there.”
UK inflation soars and Europe is next
British inflation has soared to the highest level since the coronavirus pandemic began, with clothing, fuel and oil prices moving higher as the economy reopens, according to the ONS.
The Consumer Prices Index jumped to 2.1% in May, topping the Bank of England’s 2% target for the first time since July 2019. The rate was 1.5% in April, with analyst’s expecting the move higher to hit 1.8%.
The pound has been boosted by the numbers as traders see earlier rate rises for the country due to the country’s head start on the reopening.
Europe will now see the release of core inflation and the year-on-year number is expected to hit 0.9%. The slower move to reopening should delay any price rises in Europe and the German number came in as expected to 2.5%. That could signal that the European number is also very close to the prediction.
The US saw the highest inflation in ten years recently, while Canada joined the UK with a higher number than expected yesterday. Central banks will be under pressure to explain the ongoing stimulus and extended support for near-zero interest rates.
The EURGBP exchange rate looks set to test the 0.8550 level and that is the obstacle to a retest of the yearly lows in the pair below 0.8500.
The post EURGBP Lower with Europe Next Up for Inflation appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/06/eurgbp-lower-with-europe-next-up-for-inflation/
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