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Forex Today: Pound Sterling weakens on soft UK inflation, US Dollar consolidates gains

Here is what you need to know on Wednesday, February 14:

The US Dollar Index consolidates it’s gains early Wednesday after rising 0.7% to a fresh three-month high near 105.00 on Tuesday. Eurostat will release fourth-quarter Gross Domestic Product (GDP) data in the European session and there won’t be any high-tier data releases from the US later in the day. Several Federal Reserve (Fed) policymakers, including Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic, will be delivering speeches.

The data published by the UK’s Office for National Statistics (ONS) showed on Wednesday that inflation in the UK, as measured by the change in the Consumer Price Index (CPI), held steady at 4% in January. On a monthly basis, the CPI declined by 0.6%. Pound Sterling came under bearish pressure after these data and GBP/USD was last seen trading in negative territory below 1.2600.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Swiss Franc.

USD 0.78% 0.48% 0.70% 0.73% 0.79% 1.07% 1.34%
EUR -0.79% -0.31% -0.08% -0.06% 0.01% 0.27% 0.55%
GBP -0.48% 0.31% 0.23% 0.26% 0.32% 0.60% 0.86%
CAD -0.72% 0.07% -0.23% 0.02% 0.09% 0.35% 0.63%
AUD -0.74% 0.05% -0.26% -0.03% 0.06% 0.32% 0.61%
JPY -0.80% -0.01% -0.28% -0.09% -0.06% 0.29% 0.55%
NZD -1.09% -0.27% -0.58% -0.35% -0.33% -0.26% 0.30%
CHF -1.38% -0.57% -0.88% -0.65% -0.62% -0.55% -0.30%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

The US Bureau of Labor Statistics reported on Tuesday that the annual CPI rose 3.1% in January. This reading came in above the market expectation of 2.9%. Additionally, the Core CPI rose 3.9% on a yearly basis to match December’s increase. The benchmark 10-year US Treasury bond yield climbed above 4.3% for the first time since early December, Wall Street’s main indexes declined sharply and the USD gathered strength against its rivals after the inflation report. In the European morning, US stock index futures trade flat and the 10-year US yield moves sideways at around 4.3%.

USD/JPY rose nearly 1% on Tuesday and climbed above 150.00 for the first time since mid-November. During the Asian trading hours, Japanese Finance Minister Shunichi Suzuki said that they are closely watching forex market moves with a sense of urgency. Suzuki didn’t make any comments when asked about a possible intervention. The pair edged slightly lower early Wednesday and was last seen trading at around 150.50.

USD/CHF registered strong gains on Tuesday as the soft inflation data from Switzerland weighed on the Swiss Franc. The pair is up about 1.3% this week and was last seen trading near 0.8860.

EUR/USD came under bearish pressure in the second half of the day on Tuesday and touched its lowest level in three months near 1.0700. The pair stays in a consolidation phase and trades slightly above this level in the early European session on Wednesday.

Gold turned south and dropped below $2,000 for the first time this year as US yields rallied after US inflation data. XAU/USD stays on the back foot and trades at around $1,990 mid-week.

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Eren Sengezer
Born in İzmir (Turkey), Eren Sengezer is a News Editor & Analyst at FXStreet. Receiver of “Certificate of Distinction in Study of Economics” from California State University Northridge, Eren specializes in the assessment of macro data and their potential impact on financial instruments. Before covering the American session on FXStreet, Eren worked as the Chief Editor of the FXStreet’s Turkish site for five years.
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