Marketwatch EU & UK

Daily Insights
July 19, 2023

The pound has fallen this morning after the UK’s inflation rate cooled more than expected, to the lowest level in over a year. The CPI index was 7.9% higher in June than a year ago, an impressive drop from the 8.7% reading in May, and potentially a sign that soaring interest rates may be starting to restrain one of the highest inflation rates in the world. Today’s print was the first downward surprise in five months, considerably lower than the 8.2% that most economists were expecting. Core inflation also came in below expectations, dropping from 7.1% to 6.9%, suggesting that the fastest series of interest rate hikes from the BoE in over three decades may finally be starting to reign in soaring prices. This morning’s data will surely give some comfort to MPC members, with the odds of a 0.5% August rate hike, which was almost fully priced in ahead of today’s release, falling to a 50/50 chance.

The pound slipped against the US dollar, with cable dropping below 1.30 to trade as low as 1.2930 before consolidating as traders pared bets on further interest rate hikes from the BoE. The market currently sees the benchmark rate peaking below 6%, which is considerably lower than the terminal rate of 6.5% which was looking likely after last month’s above consensus CPI release.

EURUSD continues to consolidate above 1.12 as we await the release of euro area CPI later this morning. Preliminary readings of inflation in the euro area surprised to the downside in June, with the headline rate falling to 5.5% from 6.1% in May, and this morning’s final reading for June should provide a further insight.

Economic Calendar

USD - Building Permits
GBP - CPI y/y
USD - Housing Starts

Market Indicators

Currency Pairs
Pair High Low
eur/gbp .08616 0.8578
gbp/usd 1.3125 1.3029
gbp/aud 1.9270 1.9136
usd/jpy 139.1300 1.377100
eur/usd 1.1275 1.1210
gbp/jpy 181.8200 180.3900
eur/cnh 2 2
Equities and Commodities
DOW 34,925.0000
FTSE100 7,515.0000

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.

About Francisco Mioludo


Francisco Mioludo is a trader for GPS Capital Markets at the London office. Before joining GPS, Francisco worked in Market Risk at a commodity trading firm in London where he gained valuable skills for his current role. Francisco looks after our EU and UK sales team with everything from analysis to structuring and pricing.