Softer UK inflation offers little support for GBP

Good morning

I’m back from a little jaunt around Porto, Lisbon and a few places in between.  Believe it or not, this was my first time in Portugal and I have to say I was impressed, perhaps more so with Porto than Lisbon.  Definitely on my list to return to, if only there weren’t so many other places in the world still to explore!

So, what have I missed?  Well, US and Iran continue to trade shots and the concern now is of a greater escalation of hostilities once again.  Oil prices are higher, WTI is now $86.50, Brent up to $93.40, the highest since early/mid-June and over $20 from its July lows.  And in the UK, we have new Prime Minister in Andy Burnham.  Time will tell whether he is any better than Starmer, my best guess is he’ll do some relatively little things to appease the masses to buy himself some more time.

In terms of currencies, we are not so far off the levels we had before I went away.  GBPUSD is now 1.3375, GBPEUR 1.1730, so pretty close to levels seen on my last report before I went away.  However this doesn’t tell the full story as those pairs had hit highs of and 1.3555 and 1.1825 respectively the day I left helped in part by some slightly better GDP data last week.  GBP had slipped back gradually since hitting those highs and this morning’s UK inflation releases offered little in the way of support, coming in slightly below expectations.

In the crosses, GBP is now 1.9120 and 2.3000 against AUD and NZD, while GBPJPY sits around the 218 area having traded to mid-219’s last week.  USDJPY has traded to highs around 163.25, highest for pretty much 40 years, we did see quick 50 pip dip to 162.70 this morning but we’ve since reversed a good chunk of those losses.  It really looks as though Japan will have to settle for a weak Yen for the foreseeable future.

Of course, we had the final world cup matches taking place while I was away.  I watched the England Argentina match in a square in Porto with a massive screen and thousands of Argentinians who on the whole were well-natured save for a few with their Falkland Island protest banners.  A disappointing match that certainly didn’t show England’s full potential but certainly showed what the Argentinian game was all about.  Still, it did mean we enjoyed a bizarre third/fourth play-off which was far more entertaining than any other match I saw.  As for the final, I didn’t see much of it, deciding that exploring new things was more important.  Not sure I missed much.

I’ll leave things there for now as I struggle to get back into the swing of things here.  Fortunately there is little on the calendar today now the UK inflation data is out of the way, only Aussie employment numbers overnight, so hopefully it’ll give me a bit of time to settle in.    

Have a great day…

-  02.30 AUS employment