The British sterling has reacted positively to a leap in inflation after weak wage data beforehand. The GBP/USD pair has recovered from a dip after suffering from the decelerated UK wage growth in December.
the Consumer Prices Index including owner occupiers’ housing costs 12-month inflation rate was 1.8% in January 2020, increasing from 1.4% in December 2019. The largest contribution to the inflation rate in January 2020 came from housing, utilities, gas and other fuels, which increased by 0.19 percentage points since December 2019. This jump has pushed the cable higher recovering from the latest slip caused by the UK wage growth.
Beforehand, Sterling also weathered rhetoric regarding Brexit as the EU keep insisting on regulatory alignment in order to have easy market access. On the other hand, the UK stressed that the whole point of Brexit was for regaining their sovereignty. Its expected for slower tones by both sides in their March meeting later due
Moreover, the Federal Reserve's Meeting Minutes release is set to shed some light on January's decision. Previously, The Federal Reserve held the target range for its federal funds rate during its January meeting, and signaled there would be no changes in interest rates until the end of the year.
In addition, the coronavirus outbreak still taking its toll on the global economy. According to official reports the number of people infected with the Coronavirus stabilized at levels around 58,000, although the number of total infections rose to 75,000, as about 17,000 cases were recovered. However, the Chinese government is encouraged by the deceleration in the infection rate and has sought to soothe markets with further stimulus, including aid to airlines and waiving social security taxes from firms.
Overall, reaction to UK figures, coronavirus headlines, and the Fed's minutes are of interest. The market mood is relatively calm, which is a significant change to Tuesday's fears that followed Apple's earnings warning. Further developments are awaited.