Prior to the publication of UK inflation data the Pound was trading slightly higher against a broadly softening US Dollar but was little changed against the Euro.
The Pound Sterling to US Dollar Exchange Rate was in the region of $1.5052 as of 10:30 GMT
1 US Dollar is currently worth 0.6643 pence
Economists forecast that today’s figures would show that UK consumer/producer prices climbed at a more rapid pace last month – a circumstance which would reduce the odds of the Bank of England expanding its stimulus programme.
However, UK inflation accelerated by less than expected.
Although industry experts forecast that consumer prices would rise by 3 per cent in June year-on-year, they were actually up 2.9 per cent from May’s 2.7 per cent.
Month-on-month consumer prices were down 0.2 per cent June.
Core inflation (a measure which excludes items like food and energy) advanced from 2.2 per cent in May to 2.3 per cent in June, as expected.
In response to the data economist Rob Wood argued: ‘We’ll see volatility in inflation over the summer because of discounting last year, it’s clearly heading above 3 per cent. Inflation will then start falling back’. Wood sees inflation hitting target by the end of 2014.
The GBP/USD exchange rate hit a low of 1.5045 pence per Dollar
After the figures were published the Pound weakened to 1.5052 against the US Dollar.
A separate report revealed that input prices were up 0.2 per cent in June month-on-month and 4.2 per cent higher on the year.
Meanwhile, UK house-price inflation hit 2.9 per cent in May, jumping 0.3 per cent from April.
Because of today’s report new BoE Governor Mark Carney doesn’t have to discuss controlling price gains with Chancellor of the Exchequer George Osborne through an open letter. Carney would have been obliged to do so if inflation had deviated by more than one percentage point from the central bank’s target.
The Pound also weakened moderately against the Euro as Eurozone inflation figures came in on estimate and a survey of economic sentiment in the currency bloc climbed to 32.8 in July from 30.6 in June.
The Euro was also supported by a report showing that a survey of current situation sentiment in Germany rose from 8.6 to 10.6, beating estimates for an advance to 9.
However, common currency gains were limited as the German ZEW economic sentiment gauge came in at 36.3, down 2.2 from the previous month and far lower than the 40 estimate.
Further Sterling movement can be expected tomorrow as a result of the publication of minutes from the Bank of England’s recent policy meeting.
Current Pound Sterling (GBP) Exchange Rates
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5052 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1518 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.6363 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9272 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6643 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8680 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6076 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5186 >
(As of 10:30 GMT)
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