Pound Falls to 1.1654 as Euro Strengthens on ECB Rate Expectations

The Pound to Euro exchange rate fell on Wednesday to 1.1654, reversing some of its recent gains as the Euro strengthened.

This move came despite UK inflation data showing a rise in headline inflation from 2.6% to 2.9% in July, which matched forecasts.

However, this figure did little to bolster the case for another Bank of England interest rate hike, with MUFG's Derek Halpenny saying that 'combining the jobs and inflation data, this data is unlikely to alter the dial much in terms of BoE thinking.'

The Euro found support after final July inflation was confirmed at 2.9%, with core inflation at 2.5%. Scotiabank strategists Shaun Osborne and Eric Theoret noted that 'elevated core prices keep the ECB in line to tighten policy a little further still in the coming months.'