Currency exchange market shows muted reaction

The currency exchange rate for sterling showed a muted reaction to the latest inflation figures.

Published by the Office for National Statistics yesterday (August 17th), the data revealed that the Consumer Price Index
fell from 3.2 per cent in June to 3.1 per cent in July.

However, the effect that the drop had on the market has been negligible.

Tom Levinson, currency strategist at ING, told Reuters: "As we already knew, inflation is starting to trend lower although it remains high for now."

He added: "But the data isn't likely to change the Bank of England's dovish stance, and it has had little impact on sterling."

Sterling's currency exchange rate is now looking towards the Bank's Monetary Policy Committee meeting's minutes, due to be released today.

Analysts from BNP Paribas told the news source in a note that the pound could be put under selling pressure, due to expectations that the minutes will be "on the dovish side".

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Posted by Eleanor Ward