Foreign Exchange Daily Market Update 19/09/18

Wed, September 19, 2018

Inflation in the U.K. unexpectedly rose.

Inflation in U.K. unexpectedly rose to a six-month high in August, boosted by the cost of theatre shows, computer games, transport fares and clothing.

Annual consumer-price growth increased to 2.7% from 2.5 % in July it was expected to come in at 2.4 %.

The spike came mainly from the recreation and culture sector, where prices surged up by 3.6%, the most since 2010. This was balanced out from furniture prices, auto fuels and mobile-phone charges.

The BOE raised interest rates last month to reduce emerging price pressures, some economists were expecting inflation to slow to the 2% target by year end, earlier than August that was precited. Sterling spiked 0.5% to $1.3212 after the data.

We do not expect to see any further rate hike before the UK leaves the EU in March, the next hike is hesitatingly priced in for May. Unless the UK leaves without a deal.

Core inflation rose 2.1% in August, which excludes volatile food, energy, tobacco and alcoholic drinks.

The increase is bad for workers, whose wages remain the same and are just barely outstripping the rate of inflation.

House price growth slowed to 3.1% in July. The worst-performing region was London, where prices fell 0.7%, the biggest drop since September 2009.

Sterling fell to 1.3186 after touching 1.3212 against the dollar, the pound has strengthened to 1.127 after touching 1.1282 against the euro.   

Data to look out today.   

14:00 EUR ECB’s Draghi speaks in Berlin.  

• Annual consumer-price growth rises to 2.7% in August

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PRESS RELEASE

KBRFX was mentioned in the Essex Chronicle for the top 100 companies by turnover in Essex http://www.essexchronicle.co.uk/100-Essex-businesses-revealed-annual-survey/story-25140555-detail/story.html

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