GBP

Sterling has opened the day around a cent higher against the dollar since yesterday afternoon. The pound rose when the greenback faced heavy selling pressure after the release of the US consumer price index, which rose by 7%, which was no worse than expected. The pound is little unchanged against the euro, which itself made major gains versus the dollar yesterday. Prime Minister Johnson yesterday admitted before the commons that he did attend a “party” at Number 10 and there are claims this morning that Sir Graham Brady who chairs the backbench 1922 Committee will submit letters from fellow MP’s demanding a vote of “no confidence” in the PM. Also undermining Johnson’s leadership was an opinion poll which showed a massive slump in Conservative support and a 10-point lead for Labour, their biggest lead since December 2013. UK foreign Minister Liz Truss will today seek to inject momentum into talks with the European union to resolve post-Brexit disputes over the Northern Ireland protocol.

EUR

After hitting its highest level in 2 months against the dollar on Wednesday, the euro remains steady versus the greenback this morning. The single currency gained support after yesterday’s inflation data from the US didn’t change trader’s opinions that the US central bank would tighten monetary policy any sooner than they had already expected. In their latest economic bulletin released this morning, the European Central Bank said that although Euro area growth was moderating, they expected it to pick up strongly over the course of the year, cautioning that the impact of the Omicron variant was still highly uncertain. Speeches by ECB policymakers due later today will be closely watched for any changes in their stance on the rise in inflation in the bloc.

USD

The dollar remains under pressure, below key support levels against its major pairings this morning. Although US inflation data released yesterday showed that prices rose their most since 1982, the 7% increase – just above last month’s figure, was expected by economists and prompted traders to cut their dollar “long” positions as money markets had already priced in three rate hikes by the Federal Reverse Bank this year. Supporting the market’s view, Philadelphia Federal Reserve Bank President Patrick Harper said in an interview with the Financial Times this morning, that he would support three rate hikes this year and would be open to more if inflation worsens. Later today fellow policymaker Lael Brainard is due to speak.

Economic Calendar

11.00 EUR ECB’s De Guindos Speech
13.30 US Initial Jobless Claims
14.30 EUR ECB’s Elderson Speech
15.00 US Fed Brainard Speech