The pound dollar exchange rate is 0.29% lower with GBP USD at 1.5701. The pound euro exchange rate is 0.26% higher with GBP EUR at 1.1492. The pound Australian dollar exchange rate is unchanged on a day to day basis with GBP AUD at 1.5514. UK inflation has hit a 3-year high of 5.2 percent in September. UK inflation data releases were, at one time, significant events for the prospects of the British pound on the currency markets.
This was the case in times past when interest rate shifts at the Bank of England, in response to inflation readings, was standard fare.
Those days have passed; now the interest rate is likely to be stuck at 0.5% as long as the stagnant economy remains with us whatever the rate of inflation.
Hence currency markets have largely ignored today’s readings, despite the alarming rate of growth.
Rather, it is risk sentiment that continues to drive direction for the British pound on theexchange rate scene.
Markets are being sold-off today in response to a sense of reality permeating markets concerning the prospects of a speedy resolution to the Eurozone debt crisis.
China is also witnessing a slow down in growth.
Therefore the US dollar, the deafault safe-haven asset is benefitting this morning while the Australian dollar and the euro are sold-off.
The pound finds itself caught in the middle of the continuum of risk currencies.