The pound sterling touched on a one-week trough against the euro and was flat versus the greenback after the latest inflation data was summarily dismissed by Forex traders. The UK's Office for National Statistics reported earlier today that April's CPI rose 1.5%, up from the 0.7% rise the previous month. Analysts polled had expected to see an increase of only about 1.4%. While that might give pause under normal conditions, the Bank of England also seems to agree with market sentiment that the rise in inflation is merely a COVID-19-related blip. While the Bank of England does foresee a rise in CPI to as much as 2.5% by the year's end, well above the central bank's 2% inflation target, it believes that that will revert to within acceptable ranges within a year or two.
In London trading as of 10:50 am, the GBP/USD was trading at $1.4167, down 0.1339%; the pair has ranged from a trough of $1.41637 to a high of $1.41692. The EUR/GBP was higher at 0.8619 pence, a gain of 0.0429%, off the session peak of 0.86341 pence while the low was recorded at 0.86081 pence.
EU Data No Cause for Concern
Eurozone inflation was unexpectedly tepid, comparatively; Eurostat reported that CPI for April on a month-on-month basis was flat at 0.6%, largely as expected by analysts. Core CPI for the same period was lower than expected at 0.5% on a month-on-month basis, and 0.7% on a year-on-year basis; analysts had predicted that the data would be unchanged at 0.6% and 0.8%, respectively. Producer price inflation figures for Germany, the EU's largest economy, are due out tomorrow, and analysts expect to see a slight decline to 0.8% in the numbers on a month-on-month basis. The EUR/USD is currently trading at $1.2214, down 0.1137%; the pair has ranged from $1.22041 to $1.22457 in today's session.