Forex News
Inflation in Germany, as measured by the change in the Consumer Price Index, climbed to 3.3% (preliminary) in September from 2.9% in August, Germany's Destatis reported on Wednesday.
On a monthly basis, the CPI rose by 0.6% following the 0.2% increase recorded in August and came in above the market expectation of 0.5%.
Finally, the Harmonized Index of Consumer Prices (HICP), the European Central Bank's (ECB) preferred gauge of inflation, rose by 0.6% and 3.3% on a monthly and yearly basis, respectively. Both of these prints surpassed analysts' estimates.
Market reaction
EUR/USD showed no immediate reaction to these figures and was last seen trading near 1.1350, rising about 0.1% on the day.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- The Indian Rupee gains against the US Dollar on multiple tailwinds.
- Consistent RBI intervention, lower oil prices, and receding hawkish Fed bets lend support to the Indian currency.
- Easing hopes of US-Iran diplomacy could stage a recovery for oil prices.
The Indian Rupee (INR) gains against the US Dollar (USD) after a flat opening on Wednesday. The USD/INR pair falls to near 95.84 as the Indian currency has drawn temporary support from consistent Reserve Bank of India’s (RBI) intervention through spot and Non-Deliverable Forwards (NDFs) markets, a drop in oil prices, and the dovish revision of the Federal Reserve's (Fed) interest rate expectations.
At press time, the MCX Crude Oil contract expiring on October 19 is down 0.82% to near Rs. 8,600.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, get some relief when oil prices start correcting.
Oil prices drop amid an increase in flows from Saudi Arabia
Analysts at Deutsche Bank note that the earlier surge in Brent was tempered after “Saudi Arabia has restored about half the flows through its East-West pipeline.” Goldman Sachs also said in a note that it estimates Persian Gulf oil exports, including dark exports, to have recovered to their 2025 average after doubling in September.
However, experts also question the correction in oil prices and warn of upside risks even beyond 2026, citing dashed hopes of near-term United States (US)-Iran diplomacy.
Deutsche Bank argues that persistent “scepticism about the Strait of Hormuz reopening any time soon has led investors to price a longer period of high prices into next year.”
Meanwhile, a report from Axios has shown that efforts this week by Qatari mediators to broker a diplomatic breakthrough between the US and Iran have made little progress, with neither side willing to budge. Such a scenario could allow oil prices to resume their upside.
Highest single-day FIIs selling in four months
On Tuesday, overseas investors sold shares worth 99.8 billion rupees ($1.04 billion) on a net basis, marking their biggest outflow in about four months, Reuters reports. Selling pressure by Foreign Institutional Investors (FIIs) in the Indian equity market could renew concerns over Foreign Exchange (Forex) reserves even after the RBI has buffed up Forex receipts significantly through the Foreign Currency Non-Residents (FCNR) window.
US PCE Inflation data awaited
Later in the day, investors will pay close attention to the US Personal Consumption Expenditures (PCE) Price Index data for August, which will be published at 12:30 GMT. The core PCE inflation, the Federal Reserve’s (Fed) preferred inflation gauge, is expected to have remained steady at 3.3% Year-on-Year (YoY), with monthly figures growing at a faster pace of 0.3% against the previous reading of 0.2%. The data is expected to have a significant influence on the Fed’s interest rate expectations.
Meanwhile, financial markets have trimmed hawkish Fed bets as New York Fed President John Williams has ruled out the urgency of another interest rate hike. The CME FedWatch tool shows that the odds of the central bank delivering an interest rate hike in October have diminished to 44.8% from 70.9% seen on Monday.
Williams tempers post-hike urgency but keeps Fed firmly hawkish
Fed’s John Williams has delivered a moderately hawkish message, with an FXS Speechtracker score of 6.4 slightly above the 6.2 historical average, signaling a tone that is firm but not escalating. The emphasis on “no need for urgency” after the latest rate hike, coupled with data-dependent guidance and the conditional prospect of one further hike this year, points to a cautious continuation of tightening rather than an aggressive push. Strong US economic momentum, persistent inflation risks including AI-related investment pressures, and a long glide path back to the 2% target reinforce a narrative of sustained restrictive policy relative to the established baseline.
The FXS Fed Sentiment Index fell by 1.43 points to 144.29, indicating a modest pullback in perceived hawkishness following the speech. Despite the decline, the index remains deep in hawkish territory above 100, underscoring that the bank's stance is still clearly restrictive even as the immediate urgency for additional rapid tightening is toned down in the FXS Speechtracker.
In the September policy meeting, the Fed raised key rates by 25 basis points (bps) to the 3.75%-4.00% range.
This week, the major trigger for the Fed’s interest rate projections will be the Nonfarm Payrolls (NFP) data for September, which will be released on Friday.
Technical Analysis: USD/INR holds key 20-day EMA
On the daily chart, USD/INR trades at 95.84, holding above the 20-period Exponential Moving Average (EMA) at 95.68, which underpins a mildly bullish near-term bias. The pair has been grinding higher over recent sessions, and the Relative Strength Index (RSI) at 55.7 stays in neutral-to-positive territory, suggesting room for the uptrend to extend while dips remain supported by the nearby EMA.
On the downside, initial support is located at the 20-period EMA around 95.70, where buyers are likely to defend the prevailing uptrend on any pullback. Looking up, the September 29 high at 96.15 is the immediate hurdle for the pair; above that, the USD/INR could attempt to revisit the all-time high near 97.00.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Wed Sep 30, 2026 12:30
Frequency: Monthly
Consensus: 3.3%
Previous: 3.3%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
- EUR/GBP accelerates its downtrend and hits fresh six-week lows at 0.8540.
- The upward revision of UK GDP adds to the case for a BoE interest rate hike.
- The pair has broken the bottom of the ascending channel from late July.
The Euro (EUR) is dropping sharply against the British Pound (GBP) on Wednesday, as UK data has endorsed recent claims by Bank of England (BoE) officials to hike interest rates, while German data disappointed on Wednesday. The EUR/GBP chart falls 0.3% on the day, reaching six-week lows at 0.8540 so far, with intra-day charts showing oversold levels.
Final UK Gross Domestic Product (GDP) data released on Wednesday revealed that the economy grew at a 0.5% pace in the second quarter, and 1.4% from the same period last year, above the 0.4% and 1.2% readings released in previous estimates. Beyond that, the Current Account deficit narrowed to GBP 19.932 billion in Q2 from a downwardly revised GBP 21.12 billion in Q1, against market expectations of a GBP 25.6 billion shortfall.
In the Eurozone, data from Germany disappointed, as Retail Sales contracted 0.4% in August, following a 2.5% fall in July, while the Unemployment rate remained steady at 6.4%, although the Unemployment Change rose more than twice the market consensus.
Technical Analysis: The channel's break puts bears in control
EUR/GBP trades at 0.8546, showing a strong bearish tone after plunging 0.6% so far this week and breaking the bottom of the ascending channel. Intraday momentum indicators, however, show deeply oversold levels, as the 4-hour Relative Strength Index (14) stands near 25, highlighting the stretched downward trend, while the Moving Average Convergence Divergence (MACD) indicator remains negative.
These levels suggest the posibility of a corrective bounce, which is expected to face significant resistance at the confluence of the broken trendline, the 0.8560 area, and the September 17 and 28 lows near 0.8560. Further up, the September 29 high, at 0.8585, will come into focus.
With the RSI at the current levels, the pair seems unlikely to extend lows below the 0.8530-0.8540 support area in the coming sessions. The trend, however, remains unequivocally negative, and below those levels, the July 17 high in the 0.8515 area remains in the bears' sight.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.46% | -0.14% | -0.09% | 0.18% | -0.14% | 0.01% | |
| EUR | 0.14% | -0.29% | -0.04% | 0.05% | 0.31% | -0.01% | 0.15% | |
| GBP | 0.46% | 0.29% | 0.27% | 0.36% | 0.61% | 0.30% | 0.47% | |
| JPY | 0.14% | 0.04% | -0.27% | 0.06% | 0.34% | -0.01% | 0.19% | |
| CAD | 0.09% | -0.05% | -0.36% | -0.06% | 0.27% | -0.06% | 0.13% | |
| AUD | -0.18% | -0.31% | -0.61% | -0.34% | -0.27% | -0.33% | -0.14% | |
| NZD | 0.14% | 0.01% | -0.30% | 0.00% | 0.06% | 0.33% | 0.18% | |
| CHF | -0.01% | -0.15% | -0.47% | -0.19% | -0.13% | 0.14% | -0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
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