GBP/USD up close to 0.2% after inflation figures released

The British pound managed to secure one of the top positions in the forex markets on Wednesday after an economic calendar release worked in the currency’s favour.

Traders at ATFX and other online brokers saw the currency go up by almost a fifth of a percentage point in the markets in its pair against the dollar after the inflation figures were released.

These figures showed that in July, inflation was back up to its largest amount since March.

Overall, inflation levels in the consumer price index were up to a whole percentage point during the month.

This stood in sharp contrast to the 0.6% figure recorded the month before.

This came as a surprise to a number of market watchers who were not expecting to see such a boost.

However, it fuelled demand for the pound – something that could not be said for some other major currencies over the course of the day.

The US dollar was one such currency – it ended up seeing no progress over the course of the morning.

In its index, which is a way for traders and analysts to monitor the performance of the currency compared to the euro, yen and more, it remained stagnant.

It was seen at around 92.15 at one stage earlier in the day.

This represented a position close to its worst since the spring of 2018.

It reached that low point, 92.124, at one stage on Tuesday.

The currency is now widely perceived to have firmly lost its position as a coronavirus safe haven, a status it developed during the early days of the pandemic.

Back then, it was seen as a useful currency to have in a portfolio due to the constant demand there is for dollars in cash – meaning that it could be liquidated with ease.

However, now that economies around the world are opening up and some countries – such as China – appear to be beginning a post-pandemic phase, traders are turning their attention elsewhere.

The dollar’s nerves on Wednesday in particular could also be ascribed in part to the impending release of a set of meeting minutes from the Federal Reserve bank.

These minutes are due to give some insight to traders as to what monetary policy tools the US central bank is likely to go for in the coming weeks and months.

Inflation targets are one possibility for the Federal Open Market Committee.

It is widely suspected, however, that there will be no alteration to interest rates for over a year.

Elsewhere around the world, the euro was seen up by 0.1% over the course of the day.

However, this modest rise belies the wider context, seen only on a longer timeframe price chart.

There, it becomes clear that the bloc’s common currency has managed to rise by six percentage points in its pair with the greenback in the last six weeks or so.