UK consumer prices declined 0.5% in January and, although the year-on-year rate increased to 1.8% from 1.6% which was the highest rate since June 2014, this was slightly lower than the consensus forecast of a sharper increase to 1.9%.
There was significant upward pressure on transport costs which was offset by a decline in clothing prices.
The data will dampen expectations that the Bank of England may need to tighten monetary policy more aggressively to curb inflation, although there was a larger than expected increase in producer prices which suggests underlying pressures may be building.
Sterling weakened significantly following the inflation data with the UK currency moving back below the 1.2500 level as the Euro moved to the 0.8520 area, although gilts reversed initial gains.
The UK currency was resilient at lower levels and regained support during the New York session as the Euro retreated back below 0.8500. The latest labour-market data will be released on Wednesday with a particular focus on the earnings data.
Germany The German business climate was slated to rise in July but instead it fell in terms of both current and also future expected business conditions as reflected in the IFO Index made up of manufacturing, services, trade and construction sectors as submitted by 9000 firms. Germans wishing doubtlessly that they could be as strongly […]
UK Energy Apart from announcing that there will be no further North Sea drilling licences issued, newly minted Uk Energy Minister Ed Miliband has wasted no time in greenlighting three huge new solar farms in Lincolnshire, Cambridgeshire and Suffolk. Sufficient to power 400,000 homes with an output of 1.4 GW the solar farms will cover […]
British Pound GBP is currently in fashion: with a record number of long positions and currently at the top of the G7 currency performance charts and after a period of being deeply unfashionable GBP is wanted-in a good way. The reasons for this are diverse: first off is the Bank of England’s caution on cutting […]