The British Pound (GBP) continues that tremendous strength, holding above 1.3400 with the US Dollar (USD). That resilience arrives just as investors are reacting to a tsunami of economic news and events. The currency quickly reached a multi-year high close to 1.3470 before retreating a little. This behavior further exemplifies the Pound’s impressive capacity to maintain its bullish bias against recent volatility.
Earlier this month, the UK government revealed that its annual Consumer Price Index (CPI) inflation rate had reached a 40-year high of 3.5%. That’s a huge leap from March’s rate of 2.6%. This increase has given the British Pound extra momentum, strengthening investor sentiment towards the UK economy. The GBP/USD currency pair has rallied dramatically. This underscores the extent to which domestic economic indicators continue to shape currency strength.
The Euro (EUR) has actually been more stable against US Dollar than most currencies. The EUR/USD pair continues to trade on the sidelines above the 1.1300 level and keeping its bullish sense intact. Pressure from investors wanting to push the US Dollar lower has contributed to this advance. They hang on every word of central bank officials to determine how they may influence future market forces.
Needless to say, US Dollar is under extreme duress at the moment. Lingering trade tensions and increasing worries about U.S. fiscal integrity are pouring gas on this fire. A confluence of events has eroded the aura of the Greenback. In response, traders are pouring into more stable currencies with a history of being more stable, such as the Pound and Euro.
Markets are now turning their focus to the next set of central bank communications. Analysts are watching closely, looking for any indication that monetary policy may be shifting in a way that would affect currency values. The expectations and speculation leading up to these comments inject another level of uncertainty into a volatile trading climate.