Daily Currency Report
Overview
Inflation data dominated trading with figures released in both the UK and the US. With the Bank of England publishing the minutes of its MPC meeting, and the US publishing CPI data, the interest rate outlook for the rest of the year should be more apparent.
GBP
CPI figures indicate that the BoE still intends to increase interest rates by a further 25bp. Following the news, the pound was broadly sold-off on the exchanges, although most of these losses were clawed back following weak American data.
USD
Producer Prices fell for the first time in nine months, indicating that the series of interest rises is now at a definite end.
EUR
Competitively high interest rates have helped the euro scale to record highs against the yen. Much of these gains were due to the earlier interest rate rise, and reinforced amid the speculation that the BoJ is not in a hurry to increase it's interest rates again.
JPY
The BoJ's board members agreed that future rate adjustments should be gradual, saying the central bank must avoid showing it is in a rush to raise interest rates.