Swissquote Bank Ltd. has released a report highlighting key developments in the currency markets. This report, intended for informational purposes only, advises against considering it as a solicitation or offer to trade any financial instruments. Notably, the Pound Sterling (GBP) has shrugged off an unexpected cooling in UK inflation figures, with the GBP/USD pair extending its recovery above 1.2200 during the European session on Wednesday.
UK inflation data for December surprised analysts by falling to 2.5% year-over-year, lower than the anticipated 2.7%. Meanwhile, market participants eagerly await the release of the US Consumer Price Index (CPI) inflation data, which is anticipated to have a considerable impact on market movements. The US CPI data, due today, is expected to show headline inflation ticking up from 2.7% to 2.9% in December, while core inflation remains steady near 3.3%.
The previous day's US Producer Price Index (PPI) release led to a significant easing in US yields. In this context, gold prices have recovered from initial weekly losses and have risen for the second consecutive day, trading in the $2,680s range on Wednesday. Additionally, the EUR/USD pair has maintained its range near 1.0300 during European trading hours.
As Eurozone countries roll out fresh updates to their inflation numbers today, market observers are keenly watching the potential impact on currencies and other financial instruments. A higher-than-expected US CPI figure could reverse Wednesday's selloff in the US dollar and put pressure on treasuries and equities. Conversely, a softer-than-expected CPI could temper hawkish Federal Reserve expectations, allowing the US dollar to retreat slightly and giving treasuries and equities some respite.