Pound and Euro falls ahead of inflation data

The British pound and the euro fell on Thursday, while the dollar rose as the relief over the Bank of England’s intervention in the bond markets faded.

Investors are awaiting German inflation data.

On Wednesday, the British currency jumped to its highest level since mid-June after the Bank of England announced an emergency plan to buy weak bonds such as the pound.

But in the face of skepticism about the management of the British economy and expectations about global growth, sterling fell one percent to 1.0776 against the dollar by 0751 GMT, and the euro fell one percent to 0.9642 against the dollar, which recovered.

Prime Minister Liz Truss defended the budget, which includes tax cuts.

Sterling fell to a record low of 1.0327 against the dollar on Monday as investors criticized Britain’s plans to cut taxes funded by a massive increase in borrowing while the Bank of England struggles to rein in inflation.

The euro also fell slightly after data showed annual inflation in Spain fell to 9 percent in September from 10.5 percent. Investors will closely watch German inflation figures due at 1200 GMT for any indication that the European Central Bank is going to raise interest rates.

The dollar index, which measures the performance of the US currency against the pound, the euro and four other currencies, rose 0.66 percent to 113.78, approaching a 20-year high of 114.78, after Wednesday’s worst day since March 2020.

The Australian dollar fell 1.2 percent to 0.6443 against the dollar.