US Inflation Holds and Pound to US Dollar Remains High

The Pound saw some decent gains on Wednesday in particular, reaching a 33-month high against the US Dollar.

Exchange rates are still receiving considerable support from the success of the vaccination programme while the latest policy decision from the Bank of England surrounding negative rates has also helped to bolster the currency. The GDP release on Friday will determine the direction of the Pound although at the end of trading yesterday the Foreign Exchange Market indicated that the pound finished at 1.1413 against the Euro and 1.3831 against the US Dollar.

It was another positive day for the Euro as it still took advantage of the negative correlation with the US Dollar. Despite this, the gains were held back after the national lockdown in German is to be extended until 14th March. However, a lack of vaccine progress might weigh heavily on the single currency.

The latest US consumer price index caused the US Dollar to fall back yesterday with inflation held at 1.4% in January, falling lower than expectations. As a result, risk sentiment increased, causing demand for the Greenback to drop. The US initial jobless claims data will be released today and that could support the currency if the figures drop again.


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