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Pound US dollar exchange rate: GBP nears two-month high as UK inflation beats forecasts


This acceleration in the pace of UK price growth has put the pound US dollar exchange rate at a level of $1.320, which is near the best exchange rate since late July 2018.

Beating forecasts for a UK inflation rate slowdown in August, the year-on-year reading has instead risen from 2.5 per cent to 2.7 per cent.

Monthly inflation rates have also risen sharply, with the results increasing the likelihood of a near-term Bank of England (BoE) interest rate hike.

Today’s Brexit news has also supported the pound US dollar exchange rate as EU Chief Negotiator Michel Barnier suggests ‘improving’ the EU’s offer on the Irish border.

The issue of post-Brexit movement between the Republic of Ireland and Northern Ireland is still highly contentious, but Mr Barnier’s remarks have raised hopes for a compromise.

Over in the US, the focus has been on escalating US-Chinese trading tensions – the US has imposed tariffs worth $200bn against China, while China has slapped charges worth $60bn on US imports.

The US dollar has fallen against the pound because of this development, as USD traders wait to see what will happen next between the two economic superpowers.

Both the American and Chinese tariffs will come into effect on 24th September and it seems unlikely that a truce will be called before then.

As the dust settles from this morning’s UK inflation rate data, US dollar traders are looking ahead to the afternoon’s US crude oil stock figures.

These are expected to show a reduction in US crude oil stocks.

Meanwhile, tomorrow will see the EU summit where leaders will meet to discuss Brexit progress.

In light of Michel Barnier’s comments about the Irish border, it is possible that EU leaders will offer a Brexit compromise that speeds up negotiations.



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