Sterling and the euro gain against the dollar thanks to cooling US inflation
Sterling and the euro have risen against the dollar as they received an unexpected boost from US inflation.
The “disappointing” inflation reading saw the dollar sink against the pound and euro, meaning sterling climbed to 1.31 against the dollar, its highest since late July, while the euro reached 1.17.
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Against forecasts of 0.3 per cent, US inflation remained stubbornly at 0.2 per cent in August, which analyst Connor Xampbell of Spreadex said might cast a “smidge of doubt” over a September rate rise from the Federal Reserve.
“Though it likely won’t dissuade Jerome Powell and his Federal Open Market Committee pals from raising rates in a fortnight, continued softness may well impact its long-term guidance,” he said.
The US consumer price index grew by 2.7 per cent for the 12 months through August, the Bureau of Labor Statistics revealed, down from 2.9 per cent in 12 months to July as higher fuel and rent costs were offset by cheaper healthcare and clothing prices.
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At the same time, the number of Americans filing for unemployment fell to a 49-week low, figures today showed.
Chris Beauchamp, chief market analyst at IG, said: “We are at a so-called Goldilocks moment once more, as wages rise but inflation stays muted. Thus, we get the benefit of higher consumer spending without the Fed clucking around the economy like a concerned mother hen.”