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Food prices fell last month
Inflation has just been revealed to have stayed stable at 3.8% in September. The impact on exchange rates was to send the pound into an immediate tailspin, and it’s certainly one to watch.
The 3.8% remains well above the 2% Bank of England (BoE) inflation target, but even so there was plenty to cheer the BoE. Firstly, core inflation, with the more volatile food and fuel items removed, fell to 3.5% – its lowest since the spring. Secondly, it was those items most felt by lower income families, such as food and leisure, where prices fell most.
There is plenty more data coming over in the next 48 hours or so, including retail sales and the Purchasing Managers Index (PMI) on Friday. By the end of the week we will have a clearer picture of the economic situation facing the chancellor as she plans the budget, and the Bank of England monetary policy makers as they approach the next interest rate decision in two weeks.
Meanwhile, Andrew Bailey, governor of the BoE was speaking yesterday. While, he said, not wanting “to sound too foreboding,” he highlighted the worrying echoes of the sub-prime crisis that is gathering pace in America’s private credit markets.
In business news, the cyber-attack on Jaguar Land Rover (JLR) was revealed to have been the costliest in UK history, at around £1.9bn.
In transport, Eurostar has revealed plans to run double-decker trains from London through the Channel Tunnel by 2031, as it planned to increase passenger numbers from below 20 million annually to above 30 million.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: Sterling hit by inflation data
There was little movement yesterday for the pound, as the long run of stability continued. But this morning’s inflation result caused an immediate sell-off, and there is plenty more data coming down the track in the days ahead.
GBP/USD past year
EUR: Losses for euro
It’s been a negative week or so for the euro and that continued yesterday, although it has since been reversed against the pound. We’ve got ECB president Christine Lagarde talking this evening, but it’s all pretty quiet until the PMI readings on Friday.
EUR/USD past year
USD: Dollar calm ahead of inflation
The charts may all have been green for the US dollar yesterday but the gains were not huge as an abnormally unresponsive period continued, against the euro and sterling at least. On Friday we will get the latest inflation data for the USA.
USD/GBP past year
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