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The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

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The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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How is EURGBP Affected By UK Surged Inflation

EURGBP was higher after the latest inflation figures from the UK marked a 41-year high at 11.1%.

The latest figure is a full percentage point jump from the previous month and blew past the predicted 10.7%.

EURGBP – Daily Chart

EURGBP – Daily Chart

EURGBP prices are trading just above the June high, but there is room to move toward the 0.8600 level. The Bank of England will have to go further on interest. Still, paradoxically, that can weaken the pound with a slower economy.

Traders will now focus on the coming budget from the new Chancellor, Jeremy Hunt. 

Consumer prices jumped to 11.1% in the 12 months to October, the highest since October 1981, the Office for National Statistics said on Wednesday. The ONS said that inflation would have been even higher at around 13.8% in October if the government had not intervened to cap household energy bills at £2,500 a year on average.

Hunt will now deliver a new austerity budget on Thursday. That could be a significant driver for the pound sterling as he said, "tough but necessary" decisions were needed.

"It is our duty to help the Bank of England in their mission to return inflation to target by acting responsibly with the nation's finances," he said.

The Chief Economist at the Bank of England had said last week that there was more to come from the central bank on interest rate hikes, and this data will underline that.

"The UK is in a fairly unique situation where the government is planning a vast program of measures to help balance its books," said Ellie Henderson at Investec.

"The scale of fiscal tightening proposed will no doubt drag on economic growth and, as such should bring inflation down with it, opening the door for the Bank of England to tighten policy at a less aggressive pace."

An analyst at JP Morgan commented: "These numbers sit uncomfortably alongside the message sent from the Bank of England...when it argued that only modestly higher interest rates would be necessary to bring inflation back towards its 2% target. We are not so convinced."

Jeremy Hunt's budget will be the big focus, and he hopes markets will welcome it after the Liz Truss market panic.

Last Updated: 17/11/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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