On Wednesday the pound rose on UK inflation data for September, while the euro fell amid dollar weakness and falling oil prices.
On Wednesday the pound sterling was trading higher, while the euro was lower. The rise in the British currency is linked to UK inflation data for September, which came in stronger than expected and amounted to 3.5%. The decline in oil prices also put additional pressure on the dollar.
As of 12:10 Moscow time, the pound added 0.07% against the dollar and reached 1.3392, while the euro lost 0.19% and fell to 1.1215. The dollar maintained weak momentum. According to ING currency strategist Francesco Pesole, this is due to the consequences of concerns around AI, the correction of overheated positions and short-term overbought conditions. The decline in oil prices also intensified pressure on the US currency: the dollar index briefly fell to 101.50 on unconfirmed reports of progress in Middle East negotiations.
There were almost no significant events on the US calendar. Fed Governor Christopher Waller maintained a hawkish tone and allowed for further policy tightening if necessary, while Vice Chair Michelle Bowman took a neutral stance ahead of the release of key inflation and employment data.
The acceleration of inflation in the UK to 3.5% and the rise in core services inflation to 3.7% reinforce expectations of a Bank of England rate hike in November. However, ING analysts emphasize that the strengthening of the pound is largely due to dollar weakness. ING Global Markets Head Chris Turner noted that markets are pricing in a scenario with no real surprises in the upcoming budget.
The euro continues to be pressured by political instability in France: the yield spread on 10-year French government bonds over German Bunds widened to 157 basis points ahead of Moody’s credit rating review. ING expects the euro/dollar pair to consolidate in the 1.120–1.125 range and the pound/dollar pair to stay above 0.570 by the end of the year.