GBPEUR pushes towards 19-month highs
UK bond yields continued to move on strong expectations that the Bank of England would opt for an early increase in interest rates to curb rising inflation. The Pound tried to push above 1.3750 to the dollar and the Euro languished close to 19-month lows near 1.1860. The threat of damage to the economic recovery led to a significant retracement, and potentially higher bond yields elsewhere helped curb demand for the Pound. Sterling settled near 1.3725 to the dollar with the Euro recovering to near 1.1835 as traders paring long positions (bets on cheaper euros later on).
Today’s UK inflation data will be scrutinised for clues as to whether the Bank of England will push ahead with an early rate rise. Dollar weakness dominated overnight and the Pound opens around 1.3775, with the Euro close to 1.1820. The Bloomberg USD Spot Index fell another 0.40% this morning , triggered in-part by disappointing Industrial Production figures.