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Pound Jumps As Dollar Index Pulls Back From 103 Levels; UK Core Inflation Stays Sticky

Published on Aug 16, 2023 15:12

UK`s Pound jumped during European session on Wednesday as dollar index retreated from multi-week highs and is currently lingering below 103 mark. Investors await FOMC minutes of the Fed`s last policy meeting due later today for more clues on the rate path. The dollar index is trading at 102.87, down 0.22% on the day. Besides, data from the Office for National Statistics that showed core inflation in UK continued to stay sticky is also benefitting the pound sterling. Excluding prices of energy, food, alcoholic beverages and tobacco, core inflation held steady at 6.9 percent in July, more than forecast that was expecting it to slow to 6.8 percent. Meanwhile, UK consumer prices inflation slowed to 6.8 percent in July, as expected, from 7.9 percent in June. Consumer prices were the weakest since March 2022, when inflation was 6.2 percent. UK`s 10-year government bond yields also jumped to above 4.6%, supporting the argument for the Bank of England to raise its interest rate higher for longer. GBPUSD is currently trading higher by half a percent at $1.2766 on the day.

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