Currency Note Sterling

Sterling falls as inflation data disappoints

By Smart Currency August 20th, 2014

Sterling fell to a fresh four-month low versus the US dollar after inflation in the UK was shown to have slowed more in July than was forecast. The rate of consumer-price inflation fell to 1.6% in July, against an expected drop to 1.8%. This decline pulls UK inflation further from the 2% benchmark rate set by the Bank of England (BoE), and lessens the impetus to increase interest rates. Further strong housing starts data from the US pushed sterling lower again in the afternoon against the dollar. After rallying modestly against the euro over the last few days, sterling also found itself losing ground today to fall close to its recent two-month low.

Today sees the release of minutes from the BoE latest meeting. It would seem unlikely after yesterday’s steep drop for sterling to see much further movement from these minutes, unless, of course, they hint at significant policy changes to come soon.