It was a promising start for the Pound on Wednesday as it strengthened thanks to it receiving a boost from a better-than-expected increase in domestic inflation.
However, any gains quickly disappeared as the Sterling was hit by some profit taking as analysts suggested that the currency had been overbought after it had reached a new high against the US Dollar. At the end of the day, the Pound finished at 1.159 against the Euro and 1.4108 against the US Dollar according to the Foreign Exchange Market.
The Euro lacked any direction on Wednesday after the release of the Consumer Price Index. Despite inflation rising in line with projections, the final reading was below expectations and this worked to limit the potential of the single currency. The latest PMI figures will be the main focus for investors during the final few days of this week.
It was an impressive start to the day for the US Dollar as the Greenback moved in line with US Treasury yields. This rise was then boosted by the minutes from the latest policy meeting from the Federal Reserve which indicated that it would soon look to talk about tapering its bond purchases.