Currency news

UK inflation drops below the BoE's 2% target

Chief Market Strategist at Equals Money
-
3
min read
Published:
October 16, 2024
    • GBP: 2-month low versus the dollar
    • EUR: All eyes on the ECB's rate decision
    • USD: Trump doubles down on tariffs


    Yesterday's currency recap

    Another quiet day across the currency complex as markets await tomorrow’s key US Retail Sales data, and the European Central Bank's (ECB's) interest rate meeting. Following a slew of weak EU macro-economic data, markets are now fully pricing in a 0.25% interest rate cut by the ECB.

    Sterling was largely unmoved after the latest UK employment report showed job vacancies falling and wage growth rising at its slowest pace in over 2 years.
    Ahead of the UK Budget, senior Labour party members are expressing concerns as Chancellor Rachel Reeves considers raising £40b through tax hikes and spending cuts.

    The GBP has slipped to its lowest level in two months against the USD, as today's UK inflation report unveiled a sharper-than-anticipated decline, marking the lowest figures since April 2021. Headline inflation came in at 1.7% versus expectations of 1.9%, with services inflation dropping from 5.9% to 5.6%.

    Today's GBP rates

    Currency pair Daily move* Indicative rate**
    GBPAUD 0.07% 1.9516
    GBPCAD 0.00% 1.8006
    GBPCHF 0.05% 1.1275
    GBPDKK 0.03% 8.9550
    GBPEUR 0.02% 1.2005
    GBPJPY 0.09% 195.2500
    GBPNOK -0.03% 14.1450
    GBPNZD 0.32% 2.1565
    GBPSEK -0.01% 13.6110
    GBPUSD -0.02% 1.3072


    *Daily move - against
    G10 rates at 7:30am, 16.10.24

    ** Indicative rates - interbank rates at 7:30am, 16.10.24

    Key data points

    Currency Event Period Consensus Previous
    USD Mortgage Applications Oct 11 N/A -5.10%
    CAD Housing Starts YoY Sep 240k 217.4k

    Upcoming speeches

    • ECB: Bank president Christine Lagarde

    What we think

    With the US election looming, the latest polls continue to show Harris and Trump neck and neck in the race to the White House. In a Bloomberg interview yesterday, Trump doubled down on his promise to impose tariffs on all imports into the US, stating “To me, the most beautiful word in the dictionary is ‘tariffs', it’s my favourite word.” Trump is proposing a minimum 10% blanket tariff on all imports, with tariffs as high as 60% on goods imported from China.

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