The pound against the euro rose to its highest point since February 2020 on Wednesday, after the UK inflation rate hit its highest level in nearly a decade last month.
The pound rose 0.4% against the euro, buying 1.19 euros, marking the best week against the euro since January 2021, the European Central Bank maintained its low.
Data on Wednesday showed that the UK’s October consumer price growth rate reached 4.2% annually, more than double the central bank’s target and exceeding economists’ expectations. expect An increase of 3.9%.
Dean Turner, a British economist at UBS Wealth Management, said that “the benchmark interest rate next year is likely to rise from the current historical low of 0.1% to 0.75%.”
Refinitiv’s interest rate swap data shows that the Bank of England is expected to become the first large central bank to raise borrowing costs after global interest rate makers pulled down borrowing costs to historical lows in early 2020.
Earlier this week, Bank of England Governor Andrew Bailey told the House of Commons committee that he was “very disturbed” by the rise in prices in the UK. Driven by Rising energy costs and higher used car and fuel costs.
The pound to dollar exchange rate also rose to the highest level in about a week, buying about $1.34.
The U.S. dollar index, which measures the U.S. dollar against six other currencies, is currently at its highest level in 16 months, betting that the U.S. central bank will raise interest rates from historical lows in the middle of next year. US consumer price inflation reached a 30-year high of 6.2% in the year to October, and retail sales also increased. beyond expectation.
The euro-dollar exchange rate is at its lowest level since July 2020, at approximately $1.13. The JPMorgan Chase Emerging Market Currency Index has fallen to its lowest level since September 2020, reflecting concerns about rising costs in developing countries that borrow and import U.S. dollar-priced commodities.
The Turkish Lira exchange rate against the U.S. dollar fell to an all-time low of 10.5. The South African rand exchange rate against the US dollar is 15.5, which is the lowest level since March. Although the Bank of Mexico raised interest rates in the first four meetings, the Mexican peso also weakened.
Although the Central Bank of Turkey has Cut interest rates, Interest rate setters in Brazil, Russia, Chile, and Colombia are thought to be likely to raise interest rates.
“But they may do so at the expense of economic growth, which will reduce the attractiveness of their stock market,” said Tim Graff, head of macro strategy at State Street.
In the stock market, the Stoxx Europe 600 Index was flat and close to historical highs. Previously, corporate earnings on both sides of the Atlantic were better than expected, indicating that companies are passing on higher costs to customers.
The futures contracts tracking the S&P 500 Index of Wall Street’s blue-chip stocks remained stable.
Other market trends:
The yield on the 10-year US Treasury note, which sets the tone for global borrowing costs, was flat at 1.642%.
European gas contracts for December delivery rose by 6.1% to 99.8 euros per MWh due to Shortage of supply, Because Russia has not increased exports.
Asian stock markets mostly fell. The Tokyo Topix Index fell 0.6% and Hong Kong’s Hang Seng Index fell 0.2%.