Home > Resource Hub > Daily Market News > Is the UK still working?

Is the UK still working?

Is the UK still working?

Strong inflation figures from the UK put a stop to the successive days of losses for the Pound, with GBPUSD closing back above the 1.3000 threshold. Headline CPI inflation reached 0.6%, a 20-month high, whilst PPI Input (month-on-month) beat expectations to publish at 3.3%. The annual increase in output price also turned positive for the first time in over two years. This pushed Cable (GBPUSD) back to 1.2950 and weak data from the States meant gains continued with the pair opening at 1.3014 this morning.

The Bank of England also announced that it hit its purchase targets in the latest bond auction. Following this, GBPEUR strengthened above 1.1530, providing only the third positive day for Sterling in August so far. The Pound also recovered to above the psychological threshold of 130.00 against the Japanese Yen.

The latest labour market data will be watched closely today, especially as the claimant count data will relate to July, giving insight into the immediate impact of the EU referendum on employment rates in the UK.

The Euro failed to maintain last week’s gains versus Sterling as the single currency fell by 0.42%, coming off the three-year highs seen during yesterday’s European trading session.The ZEW German economic sentiment figures printed positively at 0.5, but failed to meet expectations that were set at 1.8. European trade balance figures for June printed positively as well but the single currency still weakened. GBPEUR ended the day around the 1.1563 levels.

The European trading session saw the Dollar subjected to further selling pressure yesterday with the Euro breaking above 1.1250 for a seven-week high. This was the result of a soft inflation reading from the States which suggested no immediate rise in inflation pressures which undermined Dollar. The overall consensus from this poor inflation reading is that the upcoming Fed rate hike will be delayed beyond September.

The news yesterday was not all bad as monthly Industrial Production reached 0.7%, however this was not enough to stop the Dollar weakness against either the Euro or the Pound. Today, markets will be waiting for the Federal Open Market Committee (FOMC) minutes after the European close. These will take centre stage, especially following yesterday’s flat inflation reading.

Data to Watch: 9.30am UK Average Earnings Index, Claimant Count Change, Unemployment Rate. 7pm US FOMC Meeting Minutes.

Share this case study
Set yourself up in minutes, make payments the same day: it’s free, easy and without obligation.