020 7898 0500Sterling slid on the back of the inflation figures released yesterday morning. The Consumer Price Index (CPI), the Bank of England (BoE)’s preferred measure of inflation, held steady at 0.6% compared to this time last year. The figure had been expected to move slightly higher on the back of a weaker pound.
The nation’s currency fell as the prospect of additional quantitative easing increases slightly, as a way to artificially increase inflation. It is still too early to tell if inflation will remain low given the relative value of sterling. The BoE will likely want to see further evidence of depressed pricing before implementing any policy change as the data has been anything but steady and proving to be on a bit of a roller-coaster.
Today there will be a strong focus on the UK’s employment data. The data is expected to show a softening in both the sector and salary inflation. The market expectations are for the jobless claims to tick higher and for salary inflation to slide lower for the previous three months. If these numbers materialise, we should expect sterling to weaken as the effects of Brexit start to materialise.
