FX Update 15 February 2023

Inflation Hits & Misses

Yesterday, US inflation missed expectations of 6.2%, with a reading of 6.4%. This still represents an easing in price increases from last month’s figure of 6.5% but will be disappointing for the Federal Reserve, which has taken the most decisive action with interest rates versus the UK and EU. US stocks plummeted on the news, and cable, which was making a solid recovery, dropped from 1.2220 to 1.2120. Recent commentary from Lori Logan of the Dallas Fed pointed to rates remaining higher for longer showing a slight shift in sentiment from previous statements. She then said the most significant risk was the Fed hiking too little.

This morning UK inflation was 0.2% below expectation at 10.1%. This figure, while better than expected, shows the Bank of England still has a mountain to climb before we reach the target inflation of
2%. Key contributors to the softening inflation included transport (including fuel prices and public transport), alongside restaurants and hotels. The Pound fell sharply on this news, GBP/EUR fell 70 pips to 1.1270, and GBP/USD fell by a similar margin to a low of 1.2071. Interest rates are sure to continue rising, albeit at a slower pace, and will remain elevated for the long term if the current rate of disinflation continues this path. UK RPI printed above forecasts at 13.4%, showing consumers continue to be hit on consumable goods and services.

The Eurozone will release inflation figures next Thursday where inflation currently sits at 9.2%.

Back to the UK again, where Nicola Sturgeon has announced she will resign as Scotland’s First Minister after 8 years as the head of the Scottish Government. An announcement is expected shortly, and a source close to her said the reason for the resignation is that ‘She has had enough.’



  • US Core PPI m/m
  • US PPI m/m



  • UK Retail Sales m/m
  • US FOMC Member Bowman Speaks



  • UK Rightmove HPI m/m



  • UK Flash Manufacturing PMI
  • UK Flash Services PMI
  • US Flash Services PMI

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