Euro inflation picks up

Jeremy Thomson-Cook
Jeremy Thomson-Cook 01 September 2021

GBP: Sterling moves as a by-product of other currencies

EUR: Inflation picks up in Europe to 3%

USD: Dollar edges off in month-end volatility 

Sterling

Yesterday, the UK was very quiet in terms of data and sterling appeared to move as a by-product of other currencies. This morning the UK’s manufacturing PMI came out above expectations, however this has had little to no impact on the currency markets.

Euro

CPI came out from across Europe yesterday. The CPI and core CPI both exceeded the market expectations, coming in at 3% and 1.6% respectively. It has been rare for inflation to be above the ECB’s target, and now the market will start to question whether an interest rate rise or tapering will need to take place in Europe. The ECB expects inflation to peak later in the year, so the euro could strengthen if the trend continues.

USD

Yesterday the dollar was relatively volatile following on from Fed Chair Powell speaking on Friday at Jackson Hole. This coupled with it being month-end led to the dollar edging off as dovish tones had surprised the market on Friday. Chicago PMI and CB consumer confidence were also below market expectations, which may have contributed slightly. Eyes will be on the US this Friday with the jobs figures being released then.

Elsewhere

Noticeably overnight we saw the Australian dollar strengthen as GDP came out above market expectations. This is despite the backdrop of a slowdown in China.

Market rates

Today’s Interbank Rates at 09:58 against sterling. Movement vs Friday.

Euro €1.164 
US dollar $1.375 
Australian dollar $1.872 
South African rand R19.85 
Japanese yen ¥151.8 

Have a great day.