Sterling performed strongly yesterday, appreciating against the majority of its trade partners following the release of inflation data. Inflation throughout April rose 1.8% compared to 1.6% in the previous month. This larger-than-forecast increase is the first time in 10 months that UK inflation has risen, and the data served to reignite the debate over whether the Bank of England (BoE) may be tempted to increase interest rates from a record low of 0.5%. This speculation saw sterling continue its recovery against the US dollar, and rise to a fresh 15-month high against the euro.
Today sees the release of the voting from the latest meeting of the Monetary Policy Committee (MPC), where policy makers are expected to have unanimously decided to hold interest rates. Retail sales data will be released at the same time, and is forecast to have increased throughout April, mainly thanks to the influence of a late Easter holiday this year.
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