The Euro is making a recovery against the US Dollar, heading towards the 1.0900 mark on Wednesday morning. The recovery is due to the Dollar taking a breather amid a risk-off mood and the hawkish stance of the European Central Bank (ECB). The next focal point in the market is the US Retail Sales data.
EURUSD DAILY CHART
Pound Sterling Bounces Back Post UK Inflation Data
The Pound Sterling (GBP) is experiencing a rebound, moving above the 1.2650 mark. This surge comes on the heels of an unexpected rise in the headline UK annual Consumer Price Index (CPI) inflation data. This hot off the press inflation data has squashed hopes of aggressive interest rate cuts by the Bank of England (BoE) this year, thus giving the Pound Sterling a lift.
GBPUSD DAILY CHART
GBP/JPY Crosses the 187.00 Mark Following Strong UK Economic Data
The GBP/JPY pair continues its upward journey for the third consecutive day, trading around 187.10 during the European session on Wednesday. This momentum is driven by solid economic data from the UK released on Wednesday, which supports the GBP/JPY cross.
GBP/JPY Daily Chart
The chances of an early rate cut by the BoE have lessened due to increased price pressures, possibly leading the central bank to adopt a more cautious approach to manage inflation and maintain price stability.
UK Inflation Data Surpasses Expectations
UK’s year-over-year CPI rose by 4.0%, surpassing the previous 3.9% and the expected 3.8% reading in December. The monthly CPI also increased by 0.4%, compared to the expected 0.2%, reversing from the previous decline of 0.2%. Meanwhile, the annual Core CPI remained consistent at 5.1%, against the market expectation of 4.9%.
Japanese Yen Continues to Decline Against the British Pound
The Japanese Yen (JPY) continues to lose ground against the British Pound (GBP) due to falling consumer prices in Tokyo and weak labor data released last week. This has reinforced expectations that the Bank of Japan (BoJ) will delay its plan to shift away from its extremely accommodative monetary policy stance.
Gold Price Maintains Selling Pressure, Defends 50-day SMA Support
The price of gold (XAU/USD) continues to face selling pressure for the second consecutive day, maintaining its offered tone through the early part of the European session on Wednesday. However, the precious metal defends the 50-day Simple Moving Average (SMA) support and currently trades around the $2,024-2,025 area, just above the weekly low reached in the last hour.
XAUUSD Daily Chart
The overnight remarks by Federal Reserve’s Christopher Waller have led investors to further trim their bets for an early rate cut by the US central bank. This supports the elevated US Treasury bond yields, which lift the US Dollar to over a one-month peak and undermine the non-yielding yellow metal.
UK Consumer Price Inflation Overview: December 2023
In the world of economic indicators, consumer price inflation is a key gauge of price levels and economic health. In the UK, December 2023 brought some interesting shifts in these metrics.
|Change from Previous Month
|Consumer Prices Index (CPI)
|Up from 3.9%
|Consumer Prices Index including owner occupiers’ housing costs (CPIH)
|Core CPIH (excluding energy, food, alcohol, and tobacco)
|Core CPI (excluding energy, food, alcohol, and tobacco)
|CPI Goods Annual Rate
|Down from 2.0%
|CPI Services Annual Rate
|Up from 6.3%
|CPIH Goods Annual Rate
|Down from 2.0%
|CPIH Services Annual Rate
The rise in the CPI to 4.0% marked the first increase since February 2023. On a monthly basis, both the CPI and CPIH rose by 0.4%, matching the rate of increase seen in December 2022.
The largest upward pressure on the monthly change in both CPIH and CPI annual rates came from alcohol and tobacco. Conversely, the most significant downward pressure came from food and non-alcoholic beverages.
As for the core indices, which exclude more volatile components like energy, food, alcohol, and tobacco, the annual rates remained steady in December 2023 at 5.2% for CPIH and 5.1% for CPI. The CPIH goods annual rate slowed slightly, while the CPI services annual rate saw a slight uptick.
The overall picture painted by these statistics is one of stable inflation with some sectors experiencing more price pressure than others source.
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