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Today sterling continues to strengthen against the euro but has weakened against the dollar. Sterling’s initial reaction to the rate increase was to go higher, however gains were soon after relinquished. This follows the Bank of England’s latest inflation rate. Today’s figures beat market predictions of 9.4%, with July’s inflation rate hitting 10.1% – more than 5 times higher than the Bank’s target.
In energy news, conservative leadership candidates Truss and Sunak have ruled out freezing energy prices. Truss said “throwing money at the problem without dealing with the root cause” is “not right”. Sunak also stressed that he will not follow policies that “risk increasing inflation” as this is “certainly not Conservative”.
No significant eurozone data today however tomorrow, Spain’s balance of trade data will be released. Markets are expecting a deficit of €7bn.
Today the US will release data on retail sales and minutes from the Federal Open Market Committee (FOMC) will also be released. Chair Powell said the central bank was “looking for moderately restrictive level by the end of the year” (a 3% to 3.5% level).
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GBP : UK inflation rate at 10.1% – more than 5 times higher than the BoE’s target.
Today sterling continues to strengthen against the euro but has weakened against the dollar following the Bank of England’s latest inflation rate. This morning’s figures beat market predictions of 9.4% as July’s inflation rate hit 10.1% – more than 5 times higher than the Bank’s target. The rate is still the highest in 40 years.
Following rising energy prices, both conservative leadership candidates have ruled out freezing energy prices. Liz Truss said that “what’s not right is throwing money at the problem without dealing with the root cause” (referring to Putin). Sunak said what he “will not do is follow policies that risk increasing inflation” stressing that doing so is “certainly not Conservative”.
On Friday, data on Gfk consumer confidence will be released. The figures will provide an insight into how Britain’s consumers are feeling about the country’s current economic condition. In the last release, figures remained at a record low of -41 and are predicted to fall even lower to -43.
GBP/USD over the past year
EUR : The euro continues to weaken.
The euro continues to weaken compared to sterling. Against the dollar, the euro is choppy but continues to weaken overall.
No significant eurozone data today however tomorrow, Spain’s balance of trade data will be released. It is forecast to shift to a deficit of -€7bn
USD: The dollar gains steady strength.
The dollar gained steady strength against sterling this morning following the UK’s latest inflation data. Against the euro, the dollar is also stronger.
Today US will release data on retail sales. Figures are currently forecast at 0.2%.
The federal open market committee minutes will also be released today. The United States Fed Funds rate was raised by 75bps during its July meeting this year – this was the 4th consecutive rate hike pushing borrowing costs to the highest they’ve been in 3 years. In the previous release, Chair Powell said the central bank was “looking for moderately restrictive level by the end of the year” (a 3% to 3.5% level).
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