Price cutting and falling petrol prices push inflation to lowest rate since December

Calendar July 16, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic

Record price cutting in the Summer sales on the high street and falling petrol sales helped to push down inflation to its lowest rate since December.
Price cutting and falling petrol prices push inflation to lowest rate since DecemberThe annual Consumer Prices Index inflation rate fell from 3.4 per cent to 3.2 per cent in June, the Office for National Statistics said.

Clothing and footwear prices fell by 2.1 per cent – the biggest reduction seen in June since the ONS began collecting monthly figures 14 years ago.

Petrol prices fell by an average 2.6p a litre to 117.9p – in contrast with a 4.4p hike a year earlier – dragging down the rate of inflation.

The ONS said clothing sales were more widespread this year, particularly for categories such as womenswear.

Offsetting this were other factors such as the soaring cost of air fares – ticket prices to South Africa doubled for the World Cup – as well as higher insurance premiums.

The figures also showed a rise in “core” inflation – excluding volatile factors such as food and petrol – over the month from 2.9 per cent to 3.1 per cent.

The CPI rate of inflation remains well above the Monetary Policy Committee’s 2 per cent target and has stayed at 3 per cent or higher throughout this year.

The Bank has already predicted that CPI will gradually fall back later this year as the economic slack built up by a record recession drags down prices.

The committee has left monetary policy unchanged since last November, with interest rates at a record low of 0.5 per cent.

The retail price inflation measure – which includes mortgages costs – fell less than expected to 5 per cent from 5.1 per cent.

Factory gate prices from manufacturers fell last month for the first time since November 2008.

Category Categories: Uncategorized | Tag Tags: , , , | Comments No Comments »

Countdown to UK elections as brown heads for the door

Calendar April 6, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic

Gordon Brown has headed to Buckingham Palace to ask the Queen to dissolve parliament for a May 6 General Election.

As we have mentioned  many times before, this election will be the most closely watched by the money markets for many years with most attention focused on the how any incoming Government plans to deal with the budget deficit.

All sides have already announced policies aimed at reducing the deficit but expect many more polices over the next month. Markets will closely scrutinise any declared polices and will also be looking for more details from existing proposals so expect increased volatility in Sterling pairs as markets digest the information.

After the announcement by Germany and France of a rescue package for Greece, Government debt stopped making headlines – for last week at least. The Euro continues to be weighed down by expectations of Sovereign risk of its member countries.

The Greek deputy prime minister clearly suggested that if borrowing costs for indebted countries do not decrease the next domino in the pack to topple will be Portugal. Quite how Mr. Pangalos thinks this pearl of wisdom helps any of the PIGS is not clear!

Overnight the Royal Bank of Australia has, as expected raised interest rates to 4.25%, its fifth rise in six meetings, sending the AUS Dollar higher against Sterling, which now trades at 1.64.

Category Categories: Uncategorized | Tag Tags: , , , , , , , , , , | Comments No Comments »

Bank of England hold UK loans rates for 12 months

Calendar March 4, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
The Bank of England’s MPC voted to leave their rates unchanged and in addition held QE at £200 billion. 
The improved PMI data yesterday and the up tick in the revised Q4 GDP to 0.3% helped to reinforce this stance. 
It is now unlikely that there will be any change in monetary policy before the general election on rates or QE. 
However we have been surprised in the past by the BoE and we could be again; today the markets will be looking for any subtle changes in tome and sentiment on future monetary policy projections in the statement. 
The minutes in two weeks time will probably help to shed more light than todays decision from the BoE on future moves. 
Sterling has held firm after making gains yesterday against the USD and the JPY.
The 1.50 rate on GBP/USD is still the psychological level that the  Pound needs to hold above and build on.
Sterling was boosted by improvements in consumer confidence and PMI data and the new extra austerity measures announced by Greece. 

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , , | Comments No Comments »

Sterling crashes through 1.50 to US Dollar

Calendar March 2, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
After being sold aggressively across the currency markets yesterday the markets have taken a breather and we now await the next move. 
The political focus with the opinion polls over the weekend indicating that the chances of a hung parliament were much higher. A hung parliament may actually prove successful, however the markets do not like uncertainty and the consensus is that a coalition government will have less political clout to push through the decisive decisions especially in relation to tough fiscal planning which is inevitable.
The Conservatives have come out of the traps today stating that protecting the AAA status is central to their plans- however some feel their proposed aggressive cuts will be detrimental to recovery. 
 
On the other hand Labour propose to wait and cut later but waiting too long could mean that the horse has already bolted and the AAA rating could be lost. So this uncertainty and division is leading to a weaker pound. 
 
Yes this could be good for the UK economy and for recovery but there is a fine line between a weaker pound and the loss of confidence in Sterling and the UK economy- this would lead to a sharp rise in import prices and inflationary pressure especially if commodity prices remain high- not good; this would spill into a pressure on the UK gilt markets and inevitably the UK losing the AAA rating adding yet more pressure. 
 
So you can see the problem that uncertainty is creating. The Pound needs to get back above the psychological 1.50 level against the US Dollar. 

Sterling also lost yesterday on the purchase by Prudential of AIG’s Asian business which led to further selling of GBP and buying of USD in the light of this purchase. 

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , , , , | Comments No Comments »

Sterling softens as UK debt is in the spotlight

Calendar February 22, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
Sterling has lost over 1% against the euro and just under 4% against the US Dollar in the last month. 
The surprising move is the fall against the euro as the Greek fallout has held court in the media for sometime now and yet sterling falls against the euro. 
Weaker retail sales and weak business and mortgage lending have compounded the weak sentiment, however the real danger for sterling is the UK deficit. 
The economists are arguing with each other on whether to cut now or later- the common agreement is that cuts are inevitable but when? Economists should focus more on the how and what to cut and the politicians should lay their cards on the table with their full deficit reducing plans outlined now to avoid further uncertainty. 
The credit agencies want credible plans and not political or economic disagreement.

Lots of politics thrown into the mix over the weekend with news of a narrowing in the polls and Heseltine touting a hung parliament did not dent sterling further. However we can expect the election run up and the focus on the deficit to continue to affect the pound.

Sterling also lost further ground against the USD following the Feds decision to increase its discount interest rate by 0.25% on Thursday evening. 

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , , , | Comments No Comments »

Inflation figures create another letter from Mervyn King

Calendar February 16, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
UK CPI inflation rate came in at 3.1% against the expectation of 3.2% so slightly lower than expected. 
However the year on year rate is +3.5% and will require a letter of explanation from Mervyn King to Alistair Darling to explain why. King has regularly banged the drum that inflation will come down as we move through 2010 and today’s data to a small extent justifies his forecasts. 
However the data did not move the FX markets which have been quiet today considering the amount of market feedback. What the data does assist with is the BoE continuing with their policy of low interest rates and leaving the door open for further QE if deemed necessary.

Today European finance ministers are meeting again concerning Greece- feedback so far again is largely talk with no real details of the fundamentals of how assistance will be delivered. 

The ongoing situation is leaving the markets flat as risk is held off the table until further clarity is divulged. We have seen a further expansion in the credit default rates today for Greece reflecting the lack of clarity.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , , , , | Comments No Comments »

Political concerns weigh Sterling down

Calendar February 8, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
The Pound has lost ground today as political concerns and the prospect of the Bank of England’s policy meeting later in the week weighed down Sterling.
 
Two UK opinion polls over the weekend showed a general election, which has to held by June, would result in a hung parliament.

This weighed on sterling since many believe that such a result would lessen the likelihood of the UK getting to grips with its rising budget deficit.

Meanwhile, traders were wary ahead of the result of the Bank of England’s monetary policy committee meeting on Thursday.

By midday in New York, the pound fell 0.9 per cent to £0.8740 against the euro, lost 0.1 per cent to Y144.21 against the yen and fell 0.6 per cent to $1.5902 against the dollar.

Meanwhile, the dollar hit a six-month high on a trade-weighted basis, consolidating sharp gains after US growth figures came in stronger than expected last week. 

The figures helped give the dollar an additional boost given that the US currency was already benefiting from increased risk aversion.

Safe haven demand for the dollar was boosted as fears over Greece’s fiscal position and concerns over continued Chinese monetary tightening weighed on risk appetite and global equity markets.

The dollar index, which tracks its progress against a basket of six leading currencies, rose to a high of 79.534, it highest level since July 30. The dollar also rose to a six-month peak of $1.3850 against the euro before paring some its gains to stand down 0.3 per cent at $1.3905 and climbed 0.5 per cent to Y90.77 against the yen.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , , , , | Comments No Comments »

Markets await central bank decisions tomorrow

Calendar February 3, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
Quiet economic data today with the focus looking forward to tomorrow’s interest rate decisions from the Bank Of England and the European Central Bank. 
There is a possibility that the completion of the Quantitative Easing programme will be announced for the UK- however the ever cautious MPC will likely leave the door open for more if deemed necessary. Either way a pause or a cessation in QE should be largely beneficial for sterling in the short term. 
The statements following the respective decisions from the BoE and ECB will again be the highlight as future policy sentiment will be predicted by the markets.

Sterling had a bright start today against the USD pushing back through 1.60 and hitting a high of 1.6069 before slumping back to earlier levels. 

Reports of Asian Central banks buying GBP/USD earlier before the rally was sold back lower. EUR/USD also stuck its neck back above 1.40 again this morning to a high of 1.4026 before falling back to 1.40. 

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , , | Comments No Comments »

UK the centre of attention

Calendar January 27, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
The British Pound came under some selling pressure yesterday as the advanced Q4 GDP reading disappointed with a weaker than expected reading. 
Economic activity in the UK expanded only 0.1% in the fourth quarter of 2009 versus projections of a 0.4% rise, with the annualised rate slipped 3.2% from the previous year versus forecasts for a 3.0% contraction.

The tepid pace of recovery in the UK, could threaten further downward action in the pound if once again the ratings agencies look to cut the UK`s debt rating.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , | Comments No Comments »

Sterling continues to stride ahead in 2010

Calendar January 20, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
Another bright start for Sterling which continues it’s gains. 
Sterling hit a 6 month high against the euro and pushed higher against the USD. The move was initiated with the acceptance and recommendation from the board of Cadbury’s on the offer by Kraft. 
The Kraft offer values each Cadbury’s share at 840p and shareholders will be entitled to receive 10p per share in the form of a special dividend. Sterling gained on the back of the expected benefits from the M&A; flows of the deal. 
Then at 9:30 official UK inflation data came in much better than expected- UK December CPI has come in at +0.6% month on month, +2.9% year on year, demonstrably stronger than median forecasts of +0.3%, +2.6% respectively. 
This has raised the prospects for a Bank of England interest rate rise in 2010 and it certainly offers the Bank of England something to think about in early Feb.

This data also heightens the view on the UK employment data later this week- better data here could reinforce the view that the UK is firmly on the road to recovery. 

The Pound hit a high of 1.1455 against the euro and 1.6457 against the USD before falling back from the highs- Mervyn King is due to speak later and the market will expect a cautious approach which could take the edge off sterling- we will see later..

The Euro is under pressure this morning as the fallout in Greece continues to undermine the single currency and in addition the German ZEW came in weaker than expected for the third month in a row. The euro is closing in on key technical levels against the USD and the EUR with EUR/USD close to breaking below 1.4275 and GBP/EUR targeting 1.15. 

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Category Categories: Uncategorized | Tag Tags: , , , , , , , | Comments No Comments »