Sterling rises as further UK rate cuts look more unlikely...
Consumer price inflation hit a record high yesterday, rising at it’s fastest pace since records began back in 1997. The data showed that UK price inflation climbed above the governments target to 2.3% in July.
The market had forecasted 0.1% increase from June’s 2.0%. The rise was partly due to higher oil prices but offsetting summer retail discounts helped to reduce the overall increase. Service sector inflation also rose to a two and a half year high of 4.5%.
The statistics further diminish prospects of interest rate cuts before the end of the year following the 25 basis point reduction to 4.5% in August. Sterling gained 0.2% against the euro to reach 0.6812, stayed relatively flat against the yen at Y197.74 and gave up early gains against a resilient dollar to close at $1.8090.
News from the Royal Institute of Chartered Surveyors that UK house prices fell in July at their slowest pace for five months, also helped buoy the pound.
The dollar crept higher on the back of US inflation data that showed headline prices rose by 0.5% from the previous month, against a forecast of 0.4%. The greenback steadied on news that industrial output rose by 0.1% month on month in July.
Today’s sees the release of the MPC minutes. The reasoning behind the cut had been clear; GDP growth had slowed more sharply than anticipated, but it’s the level of consensus that will be eyed to see how members voted. Most commentators predict a 7-2 split.
UK unemployment figures are due out at 9.30am this morning. Most analysts are predicting the claimant count to continue its rising trend in June. This will have been the 8th rise in the past eleven months.
The market had forecasted 0.1% increase from June’s 2.0%. The rise was partly due to higher oil prices but offsetting summer retail discounts helped to reduce the overall increase. Service sector inflation also rose to a two and a half year high of 4.5%.
The statistics further diminish prospects of interest rate cuts before the end of the year following the 25 basis point reduction to 4.5% in August. Sterling gained 0.2% against the euro to reach 0.6812, stayed relatively flat against the yen at Y197.74 and gave up early gains against a resilient dollar to close at $1.8090.
News from the Royal Institute of Chartered Surveyors that UK house prices fell in July at their slowest pace for five months, also helped buoy the pound.
The dollar crept higher on the back of US inflation data that showed headline prices rose by 0.5% from the previous month, against a forecast of 0.4%. The greenback steadied on news that industrial output rose by 0.1% month on month in July.
Today’s sees the release of the MPC minutes. The reasoning behind the cut had been clear; GDP growth had slowed more sharply than anticipated, but it’s the level of consensus that will be eyed to see how members voted. Most commentators predict a 7-2 split.
UK unemployment figures are due out at 9.30am this morning. Most analysts are predicting the claimant count to continue its rising trend in June. This will have been the 8th rise in the past eleven months.
posted by Drs Search @ 8:27 AM
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