Chart of the day - EURGBP (19.04.2023)

The British pound is the best performing currency in the broad FX market at the moment. The EURGBP pair is trading close to 0.35% down today, triggered by a strong UK CPI reading. The UK's March CPI inflation reading came in at 10.1% YoY against a forecast of 9.8% and the previous reading of 10.4%. Core inflation continued unabated and came out at 6.2% against an expected fall to 6.0%. It had previously been 6.2%.

As reported by Reuters, the decline in price pressures in the UK economy is disappointing, raising the prospect of another interest rate hike in the UK. The swaps market is currently pricing in an 80% chance of a 25 basis point hike at a future BoE meeting. Let's remember that the UK has the highest inflation rates among Western European countries and is the only one struggling with double-digit inflation.

UK Finance Minister Jeremy Hunt said Wednesday's data confirms why the government must continue its efforts to bring inflation down.The EURGBP pair lost ground sharply after raising the odds of the BoE continuing its interest rate hike cycle. The currency pair has drifted below support levels set by exponential moving averages, so a further reaction to these levels could be a key factor creating further movement in the pair. Source: xStation 5