GBPUSD: Dollar rises in European session; Pound depreciated
Weak US CPI weighs on dollar
The dollar took a big hit on Tuesday after data showed U.S. consumer prices were flat in October after rising 3.7% in September, while the dollar rose 3.2% year-on-year. , fell below expectations.
The stability of inflation is the most important factor in predicting the Fed's chances of maintaining its tightening stance, especially after inflation rose more than expected in August and September.
Indeed, Fed officials are keen to maintain tight monetary policy ahead of the latest data release. As a result, slowing inflation is weighing heavily on the dollar as traders assess the likelihood of rate hikes this year and focus on when the Fed will start cutting rates.
"We still think the decisive blow to the dollar will come from a decline in activity data, which could cause the market to calm down," ING analysts said. Further improvement is expected based on an assessment of the trend toward lower interest rates. “That’s why we’re interested in retail sales.”
U.S. retail sales data for October will be released later in the session, but analysts expect retail sales to decline 0.3% from the previous month, when retail sales rose 0.7%.
Pound depreciates as UK inflation rate declines
In Europe, GBP/USD fell 0.2% to 1.2475, below levels last seen in September, after UK inflation slowed more than expected in October, providing some relief. It went below. Support from the Bank of England.
UK CPI rose at an annual rate of 4.6% in October, down sharply from 6.7% in September and the smallest increase in the past two years. The Bank of England recently paused its rate hike cycle, raising the key interest rate to 5.25%, the highest level since the 2008 financial crisis, but officials have consistently said they will continue to cut interest rates despite the weak economy. has emphasized that it is still a long way off. heading towards a recession.
The dollar took a big hit on Tuesday after data showed U.S. consumer prices were flat in October after rising 3.7% in September, while the dollar rose 3.2% year-on-year. , fell below expectations.
The stability of inflation is the most important factor in predicting the Fed's chances of maintaining its tightening stance, especially after inflation rose more than expected in August and September.
Indeed, Fed officials are keen to maintain tight monetary policy ahead of the latest data release. As a result, slowing inflation is weighing heavily on the dollar as traders assess the likelihood of rate hikes this year and focus on when the Fed will start cutting rates.
"We still think the decisive blow to the dollar will come from a decline in activity data, which could cause the market to calm down," ING analysts said. Further improvement is expected based on an assessment of the trend toward lower interest rates. “That’s why we’re interested in retail sales.”
U.S. retail sales data for October will be released later in the session, but analysts expect retail sales to decline 0.3% from the previous month, when retail sales rose 0.7%.
Pound depreciates as UK inflation rate declines
In Europe, GBP/USD fell 0.2% to 1.2475, below levels last seen in September, after UK inflation slowed more than expected in October, providing some relief. It went below. Support from the Bank of England.
UK CPI rose at an annual rate of 4.6% in October, down sharply from 6.7% in September and the smallest increase in the past two years. The Bank of England recently paused its rate hike cycle, raising the key interest rate to 5.25%, the highest level since the 2008 financial crisis, but officials have consistently said they will continue to cut interest rates despite the weak economy. has emphasized that it is still a long way off. heading towards a recession.
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