Sterling Higher After CPI Data


UK reports that British CPI rose in December; USD under pressure ahead of Biden inauguration.

News that UK inflation picked up slightly in December helped to push the pound higher against both of its key rivals, the US dollar and the euro. The UK’s Office of National Statistics reported earlier today that the December CPI rose 0.6% on an annualized basis, beating the 0.5% that analysts had predicted. Annualized Core CPI, which excludes fuel and food prices, was also unexpectedly higher at 1.4% against a forecast of 1.3%. Economists attribute the global rise in oil prices to the higher inflation, as well as the temporary lifting of some of the COVID-19 related travel restrictions.

In London trading as of 11:01 am, the GBP/USD was trading higher at $1.3704, a gain of 0.5289% and sliding away from the session peak of $1.37194. The EUR/GBP was trading at 0.8845 pence, a loss of 0.5408%; the pair has ranged from a trough of 0.88369 pence to a peak of 0.89052 pence.

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Dollar Under Pressure Ahead of Biden’s Inauguration

The US Dollar is being weighed by comments from the incoming Secretary of the Treasury, Janet Yellen, who had said that Congress needed to “act big” regarding fiscal spending, without consideration for the debt burden. Those instructions left the greenback vulnerable against most of its rivals. Analysts expect the Federal Reserve Bank to continue with its dovish stance. Later today, Joe Biden will be sworn into office as the 46th President of the United States. Market players expect him to immediately begin the critical task of minimizing the spread of the coronavirus while simultaneously providing financial relief to consumers and industries that have been negatively impacted. A third stimulus package is likely to be high on the Biden administration agenda. An improvement in risk sentiment weighed on the greenback and helped lift higher risk currencies. The AUD/USD was trading higher at $0.7732, a gain of 0.5266%, while the NZD/USD was higher at $0.7136, up 0.2557%.

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