Sterling recorded a rise against both the Dollar and the Euro following the announcement of strong UK producer price index data for April. The announced PPI input rates rose to 2.6% as opposed to the 1.6% the market expected and declined from the 3.7% from the previous month’s reading. This has kept active the problem of whether the Bank of England should reconsider tightening its monetary policy to meet the inflation rise. Following the announcement the pound rose as high as 1.6396 against the Dollar making a near 40 pips rise while the Euro extended it losses against the Sterling and is currently traded at session lows around 0.8860.
The Producer Price Index Input measures the monthly inflation rate manufacturers experience when they are buying goods or services. It shows what the average change in price is for a fixed amount and type of goods and services as purchased by manufacturers in the UK. Usually a high reading is associated by hawkish currency behavior.