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It was a bad day for the pound on Wednesday. Following an above-expected rise in UK inflation, the dollar gaining more than 0.4% percent and the euro over 0.5% on sterling.
UK inflation rose to 3.8% in July, driven by increases in fuel prices and the cost of food. This climb has analysts predicting that the Bank of England’s Monetary Policy Committee will slow down its pace of interest rate cuts, with there being no further reductions until 2026.
While inflation rose and the chances of an interest rate cut fell, the FTSE 100 set a record high – even while markets in Europe fell as investors sold shares in defence stocks.
Later today, data on British services and manufacturing will reveal how US President Donald Trump’s tariffs have impacted UK industry.
Over in the US, today sees the start of the Jackson Hole symposium, a meeting of the Federal Reserve’s central bankers. Along with a speech from Fed Chair Jerome Powell on Friday, the talks will give greater clarity over when Americans can expect an interest rate cut.
Like the UK, today sees the publication of European services and manufacturing data. The EU bloc has been much harder hit by US tariffs and the impact in today’s reporting may be more severe.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: Inflation down, share prices hit new high
The pound was down significantly against its competitors on Wednesday, falling more than 0.4% against the dollar and more than 0.5% on the euro. However, the dips in currency don’t reflect the stock market where the FTSE 100 hit an all-time high.
GBP/USD past year
EUR: Strong day for euro
After a month of declines, the euro regained significant ground yesterday. It climbed 0.1% on the dollar and more than 0.5% on the pound, undoing more than half of the previous month’s losses. New EU manufacturing and services data later today may upset its momentum, however.
EUR/USD past year
USD: Dollar stable ahead of Fed talks
Along with the euro, the dollar climbed above the pound, seeing gains of 0.4%, though it remained level against most other currencies. Today marks the start of the Jackson Hole symposium, providing greater clarity on when the US can expect an interest rate cut.
USD/GBP past year
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