The Pound increased on Wednesday after UK inflation came in higher than expected, however, its fortunes changed during the afternoon.
Initially, the currency reacted to the increase in UK inflation taking it to a new three-month high against the Euro. By the afternoon, the gains were lost as coronavirus cases increased and concerns about unlocking the economy grew. Eventually, the currency finished at 1.1709 against the Euro and 1.3859 against the US Dollar according to the Foreign Exchange Market.
It was a quiet start to the day for the Euro as it reacted to news that industrial production in the bloc came in below expectations as it contracted by 1% during May. Despite this, it rebounded during the afternoon as it reacted to the decline in the US Dollar.
The Dollar weakened yesterday after the Federal Reserve Chair announced that any rises in inflation were down to temporary causes such as bottlenecks in the supply chain. Any hopes that investors had on support were quickly dampened and that meant that demand for the Greenback was reduced. Hopes turn to the release of the latest US jobs data that could help to support the currency.