The Sterling pound today rallied higher against the US dollar following the release of the latest UK inflation data, which beat expectations by a huge margin. The GBP/USD currency pair today rallied to new six-week highs following the positive releases, but later dropped to new lows due to negative Brexit headlines.
The GBP/USD currency pair today rallied to a high of 1.3215 in the early European session before dropping to a low of 1.3098 on Brexit headlines.
The currency pair’s rally was triggered by the release of the UK consumer price index data for August by the Office for National Statistics. The headline CPI prit came in at a monthly 0.7% beating expectations set at 0.5%. The annual figure was recorded at 2.7%, which was higher than the expected 2.4%. The core CPI print came in at an annualized 2.4% beating expectations by 0.3%. The upbeat inflation data triggered a surge to new 6-week highs for the cable. The retail price index and the producer price index for August were also released at the same time, but had a muted impact on the pair.
The upbeat CPI data also raised investor expectations of fast rate hikes by the Bank of England. The pair dropped to new lows in the mid-European session following fresh Brexit headlines indicating that Theresa May was set to reject an improved offer from the EU regarding the Irish border.
The currency pair’s short-term performance is likely to be affected by Brexit headlines and US releases.
The GBP/USD currency pair was trading at 1.3132 as at 12:19 GMT having dropped from a high of 1.3215. The GBP/JPY currency pair was trading at 147.42 having declined from a high of 148.54.
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Pound Rallies on Upbeat UK Inflation Data, Declines on Brexit News
