Sterling falls on weak inflation data
Sterling drifted lower after weaker than expected inflation data which reduced expectations that the Bank of England would either hike interest rates or slow down asset purchasing (the money printer). GBP retreated to 3-week lows around 1.3730 against the dollar while the Euro edged higher to 0.8530. Reservations over global growth conditions and the Afghanistan situation limited potential support for the Pound.
The Fed minutes provided insight into the likely timing of a tapering decision, where the money printer is dialled down. Most of the committee seemed to agree that a move would become appropriate in the coming months. The dollar rose to a five-month high against the Euro as EURUSD traded down to 1.1666 overnight. AUD and NZD extended losses overnight as the covid virus spreading added to risk aversion, AUDGBP touched 1.9100 and NZDGBP traded to a low of 2.000.