Yesterday saw the release of number UK data figures which included Julys Producer Price Index, Retail Price Index and crucially the Consumer Price index. Regrettably, the majority missing expectation in turn seeing Sterling Exchange Rates nose dive.
The Retail Price index data posted above expectation realising 3.6% against the forecast 3.5%. The level which is the highest reading since Mays 3.7%. Essentially demonstrating that the UK’s appetite for consumable goods remains on track, all be it temporarily. Unfortunately for commuters this 3.6% will define future train rate hikes so will no doubt have left a bitter taste in the mouths of financiers who had an eye of yesterday’s data.
Julys Producer price index improved on last months reading to 0.0% flat, improving from -0.3%. However, the data missed its predicted level of 0.4%. Therefore, demonstrating that production prices are not increasing within manufacturing or raw good purchases.
With the Bank of England having highlighted time and time again the correlation with UK inflation and potential interest rate rise yesterday’s Consumer Price Index was under the microscope. Markets had been looking for a figure in excess or on par with the 2.7% anticipated. Julys figures missing expectation realising just 2.6% short of expectation and comfortably below the levels at which the Bank of England would intervene or have cause to raise interest rates.
The latest Consumer Price Index data essentially putting to bed the possibility of the Bank of England raising interest rates this year with 2018 becoming much more tangible for a rise. This combined with the latest Retail Price index demonstrating that the UK’S appetite for goods isn’t decreasing proving inconclusive for the Bank of England.
The Bank of England, therefore, will continue to find itself in the unenviable place of balancing Brexit uncertainties, financial markets expectations of a rate rise and sticking to their plans in order for the UK economy to prosper.
Following the keenly anticipated CPI data Sterling exchange rates tumbled with GBP depreciating considerably against a basket of currencies.
GBP/EUR opened yesterday at 1.1025 having enjoyed a small spike following poor German Preliminary GDP which missed the target. However, this small gain was unable to compensate for the depreciating Pound which fell to a month low of 1.0957, breaking through the critical 1.10 level.
Sterling Exchange Rates also lost considerable ground against the struggling dollar. GBP/USD falling from around 1.2952 to 1.2852 losing nearly a percent in the Tuesdays trading window.
Today will continue to be a busy day today with the release of the UK’S Average earnings Index. Used to demonstrate any labour or wage prices increases.
The UK Claimant account change data is also released, essentially showing the increase of decrease of those claiming state benefits and finally the Unemployment rate, showing a reduction of the increase in the UK’s Unemployment.