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The pound got a bullish boost when the U.K.’s better-than-expected CPI report came out. And that boost was enough to propel the pound higher against all its peers to end up as the best-performing currency of the session.

The Aussie, meanwhile, was the worst-performing currency of the session, very likely because of the commodities rout.

  • German WPI m/m: -0.7% vs. 0.2% expected, 0.3% previous
  • U.K. CPI m/m: 0.3% vs. 0.2% expected, 0.5% previous
  • U.K. CPI y/y: 2.9% vs. 2.7% expected, same as previous
  • U.K. core CPI y/y: 2.6% vs. 2.3% expected, 2.4% previous
  • U.K. HPI y/y: 5.6% vs. 3.7% expected, 4.5% previous
  • U.K. PPI input m/m: -1.3% vs. -0.5% expected, -0.3% previous
  • U.K. PPI output m/m: 0.1% vs. 0.2% expected, 0.4% previous
  • German ZEW economic sentiment: 18.6 vs. 21.6 expected, 20.6 previous
  • Euro Zone ZEW economic sentiment: 37.7 vs. 37.2 expected, 35.1 previous

Major Events/Reports

U.K. CPI improves further

According to the latest CPI report from the ONS, the U.K.’s CPI rose by 0.3% month-on-month between April and May.

This is slower than the previous reading of +0.5%, but it did manage to beat expectations for a 0.2% increase.

Year-on-year, this translates to a 2.9% increase, beating expectations that May’s headline reading would match the annual reading in April by printing a 2.7% increase.

Even better, the core reading rose by 2.6% year-on-year, instead of slowing from 2.4% to 2.3% as expected. And that’s because the rise in CPI was broad-based, with all components getting a boost, not just energy prices.

Better still, the headline reading also managed to beat the BOE’s staff forecast of +2.7%, as laid out in the May Inflation Report. It’s therefore possible that rate hike expectations got revived. That sure explains why the there was follow-through demand for the pound.

Commodities gutted

Commodities were broadly bleeding out during the duration of the session, with metals getting hit the hardest.

Oil benchmarks had a bad run.

  • U.S. WTI crude oil was down by 0.30 to $45.94 per barrel
  • Brent crude oil was down by 0.21 to $48.19 per barrel

Base metals got whupped extra hard.

  • Copper was down by 1.13% to $2.585 per pound
  • Zinc was down by 1.17 to $2,451.50 per dry metric ton

Precious metals also suffered.

  • Gold was down by 0.24% to $1,265.90 per troy ounce
  • Silver was down by 0.81% to $16.806 per troy ounce

Market analysts say that sentiment for commodities (and especially base metals) soured because of the earlier slump in iron ore prices. And the slide in iron ore prices, in turn, was blamed on the lack of signs that China, the world’s top commodity importer, is trying to stimulate growth in the economy.

Risk-on vibes in Europe

Risk-taking was the name of the game during the morning London session, well, at least in the European equities market.

  • The pan-European FTSEurofirst 300 up by 0.43% to 1,527.13
  • Germany’s DAX was up by 0.46% to 12,748.75
  • The blue-chip Euro Stoxx 50 was up by 0.30% to 3,556.50

U.S. equity futures also got some support.

  • S&P 500 futures were up by 0.14% to 2,430.00
  • Nasdaq futures were up by 0.32% to 5,737.38

Major Market Mover(s):


The pound got a bullish boost when the U.K.’s CPI report was released. Pound bears were waiting in the bushes, though, and they tried to force the pound lower. Unfortunately for the bears, there was enough follow-through demand to send the pound higher still during the course of the session.

GBP/USD was up by 65 pips (+0.53%) to 1.2730, GBP/AUD was up by 126 pips (+0.75%) to 1.6888, GBP/CHF was up by 46 pips (+0.38%) to 1.2315


The Aussie was the worst-performing currency of the session, despite the risk-on vibes. Commodities were broadly in retreat during the session, though. And that very likely helped to pull down the Aussie.

AUD/USD was down by 12 pips (-0.23%) to 0.7537, AUD/CAD was down by 34 pips (-0.36%) to 1.0001, AUD/NZD was down by 23 pips (-0.23%) to 1.0434

Watch Out For:

  • 12:30 pm GMT: Headline (0.0% expected, 0.5% previous) and core (0.2% expected, 0.4% previous) readings for U.S. PPI
  • 10:45 pm GMT: New Zealand’s current account ($0.95B expected, -$2.34B previous)
  • 10:45 pm GMT: New Zealand’s FPI (-0.8% previous)