UK inflation mixed

Yesterday's currency recap

USD finished the day marginally stronger after Federal Reserve (Fed) members Daily and Waller both made calls that US interest rates should stay on hold until there is more progress on inflation.

GBP was marginally supported following the morning's job numbers which showed wage growth came in slightly stronger in the three months leading into December, suggesting inflationary pressures on the economy. Governor Bailey was on the wires yesterday doing his best to downplay the expected uptick in inflation over the coming months.

Core CPI in Canada came in higher than expected in January at 2.7% versus an expected figure of 2.4%, illustrating the inflationary pressures remaining on the Canadian economy.

Today's GBP rates

What we think

The headline CPI came in higher than expected this morning at 3% year-on-year compared to the expected 2.8%. However, the services number didn’t rise as much as expected. This is welcome news for the Bank of England (BoE). Overall GBP performance is mixed and the numbers haven't given the currency any clear direction.

As the day unfolds, we anticipate a calm atmosphere with the only highlight being the release of the latest FOMC meeting minutes this evening. However, we don't expect any surprises, as Fed Chair Powell and other key members have already shared their insights post-meeting.

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