FXStreet (Barcelona) – Jonathan Pryor, Corporate Treasury Analyst at Investec, notes that soft inflation data did little to weaken the Pound as BOE Governor Carney’s assurance of looking at inflation implications due to falling oil prices, helped sterling remain above the 1.57 handle.
“Many other Emerging Market currencies saw heavy losses on the day following the risk averse nature of the session, as stock markets were a sea of red, although European markets rallied into the close and Brent oil tumbled below $60 a barrel.”
“In the G7 space, the Euro strengthened against the US Dollar after a strong German ZEW sentiment reading, whilst the Pound was also stronger against the US Dollar despite UK Inflation falling to 1%, its lowest level in 12 year lows.”
“Worth noting that the initial reaction to the low inflation reading was to sell the Pound however the sell-off reached a base just above the 1.56 handle, after BOE Governor Carney released accompanying remarks highlighting the Bank of England will look through the short term implications to inflation of the current drop in oil prices. The implication being that the soft inflation print won’t alter the UK policy outlook for now. On this news Cable rallied over a cent and remained above the 1.57 handle this morning.”