In London trade, the British pound gained ground against both the greenback and the euro as Forex traders dismissed any concerns over North Ireland trade. Instead, market players are looking ahead to the upcoming policy meeting of the European Central Bank and then Thursday’s inflation data out of the US. The latest tiff between the UK and the EU is based on an accusation by EU officials that London has failed to meet some requirements of the post-Brexit trade agreement; the EU has initiated a legal response to that alleged failure.
In London trading as of 11:14 am, the GBP/USD was trading at $1.4181, a gain of 0.2332%; the pair has ranged from a session low of $1.41405 to a peak of $1.41894. The EUR/GBP was lower at 0.8598 pence, a loss of 0.0198% and off the session high of 0.86123 pence, while the low was recorded at 0.85833 pence.
US Inflation Data in Focus
Looking at the economic calendar for the day’s potential market moving events, today will see the Bank of Canada’s rate decision. Analysts don’t expect to see any changes to current policy and expect that the BoC will leave rates at the current level of 0.25%. Likewise, analysts don’t expect much movement from the ECB which meets tomorrow; expectations are that the current negative rate environment for deposits will remain in place. As far as the US CPI is concerned, there are expectations that the May CPI reading for core inflation will show a decline to 0.4% (on a month-on-month basis) from 0.9%, while core CPI (annualized) will show a rise to 3.4% from 3%. The annualized CPI reading is also expected to show a jump to 4.7% from 4.2%. Market players are anxious to see if inflation begins to spike given the recent stimulus efforts of the Biden administration.