GBP EUR Drops After Inflation Meets Expectations 

GBP EUR Drops After Inflation Meets Expectations 

The GBP EUR exchange rate was -0.25% lower after the release of May inflation numbers for the UK came in at 9.1%, which analysts expected. Core inflation also dipped by 0.1%.  

The GBP to EUR is still holding the support at 1.1650 and the data will determine the next path. 

Inflation figures fail to spark the pound sterling 

The pound sterling versus the euro was lower after inflation readings for the UK economy. 

The headline inflation rate on a yearly basis rose by 0.1% to 9.1% but this number aligned with analysts’ predictions. The Bank of England predicted 11% in the autumn, so the downside is contained for the current data. Core inflation was 0.1% lower to 5.9% but analysts expected a higher reading of 6.2%. 

The latest figures hurt the pound sterling, increasing the risk of inflation with wages suffering and consumers feeling the heat. Some of the price segments in the latest reading eased but there were also signs that companies took the brunt of increased prices in their margins. 

Rishi Sunk commented that the Bank of England will “act forcefully” to combat rising prices with the latest 40-year high of 9.1%. 

“I want people to be reassured that we have all the tools we need and the determination to reduce inflation and bring it back down,” he said. 

It is not only the UK that is struggling. Canada saw its highest inflation since 1983 yesterday and US recession fears. 

Germany taking further action on Russian gas threats 

Germany will move to the second phase of its emergency gas plan, according to Bloomberg. 

Russia cut further supply to Europe last week and there are fears over stocks for the winter. Germany and The Netherlands moved ahead with plans to restart coal production previously curbed by government caps. 

Germany could move to phase two  of the emergency controls. The highest level includes the state seizing control of the distribution network with fuel rations and controls. 

The latest move comes after the International Energy Agency (IEA) warned that Europe should prepare for all Russian fuel to be cut. 

“In the near term, the scramble for alternative sources of fossil fuels creates clear openings for non-Russian suppliers,” the group said. 

It also advised that Europe must respond “with a determined acceleration of investment in efficiency, renewables and other clean technologies”. 

The UK is less at risk of gas shortages this winter than the EU but there are still issues, with the price of petrol hitting new highs on the day of the first rail strike. The average cost rose to 189.33p a litre, according to the RAC Fuel Watch. Diesel was also seen climbing to new highs of 197.11p a litre. 

In other economic data, consumer confidence was lower for the Eurozone with a reading of -23.6 after analysts had expected -20.5. 

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