Although Sterling failed to gain on the euro the currency was able to edge up against a handful of currencies after UK inflation unexpectedly rose to a six-month high.
In January consumer price pressures rose by 1.8 percent year-on-year, compared to December’s 1.3 percent.
Although this isn’t far off the Bank of England’s (BoE) 2 per cent target, Senior UK economist at Capital Economics Ruth Gregory argued that the latest figures were “unlikely to move the dial on the outlook for interest rates”.
She also added:
Meanwhile, the single currency managed to recover after Tuesday saw the euro US dollar exchange rate plummet to a three-year low.
Figures from China showed that the number of new Covid-19 cases fell for the second day in a row, which boosted the single currency after yesterday’s increased fears the outbreak would weaken the German economy.
Yesterday’s German ZEW survey revealed that investor sentiment deteriorated at a faster pace than expected, plummeting from the previous month’s four-year high.
ZEW President, Achim Wambach stated that the “feared negative effects of the coronavirus epidemic in China on world trade have been causing a considerable decline of the indicator of economic sentiment for Germany.”
Looking ahead, the single currency could come under pressure tomorrow if Germany’s Gfk consumer confidence index shows the decline in sentiment forecast by economists.