On Friday, the EURO inched and the Japanese yen dropped slightly but stayed on track for the strongest week in 3 months in early trade in Europe before key US inflation data was due to be released.
EUR/USD inched slightly higher to 1.0845 in Europe, after data showing that eurozone consumers in June stopped lowering their inflation expectations after four straight monthly declines.
According to the ECB’s Consumer Expectations Survey, the average consumer was expecting average inflation to be at about 2.8% over the next year, stable from May after a steady 3.3% decline from January.
In June the ECB reduced interest rates and it is generally expected it will do so again in Sept. The policymakers would however likely prefer those expectations to continue falling as they ease monetary policy.
GBP/USD traded at about 1.2870, 0.2% higher, much lower than the one-year high of 1.3044 reached last week.
The Bank of England will meet again next week, and although markets are expecting about 50 bps of rate cuts this year, there is still great uncertainty over whether policymakers would delay until September or agree to a rate cut then.
