The pound strengthened against the euro yesterday, buoyed by confirmation that the UK will be lifting most COVID-19 restrictions from July 19. It is still trading around three-month highs against the euro this morning but is weaker against the dollar.
Inflation data for the UK was released this morning, showing the highest annual inflation rate since 2018 at 2.5%. The Bank of England has, so far, stuck to the stance that higher inflation is transitory due to economic recovery from the pandemic.
The dollar was boosted yesterday due to US inflation data, with readings for core and annual inflation rate both above market expectations. The markets will now be looking to Federal Reserve Chairman, Jerome Powell, for any comments surrounding this as he testifies in front of Congress today and tomorrow.
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