020 7898 0500Sterling was once again on the defensive on Monday following last week’s “flash crash”. While the currency has stabilised it was trading below some key psychological levels during the first trading session of the week.
With the data flow limited for the start the week, it was yet another opportunity for analysts to discuss the impact of Brexit. This time it was the British Retail Consortium (BRC) who has warned that retail prices could go up as the retail sector fail to absorb increasing costs. The BRC is warning that if the UK loses barrier-free trade with Europe, it would be inevitable that we would revert back to World Trade Organization (WTO) rules, which would see tariffs rise. The BRC went on to give examples of tariffs on clothes of up to 16% and on meat of up to 27%.
The UK is already facing price pressures as sterling continues its slide, and the risk of additional tariffs will compound the issues of inflation. The concern will be that the UK could face inflationary pressures in an environment where growth is limited and, as a result, job growth and salary growth is tepid. However, nothing is set in stone yet.
Today, much of the focus will be on Bank of England (BoE) member Michael Saunders who is due to testify before the Treasury Select Committee.
