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Negative inflation figure makes history

Negative inflation figure makes history

Yesterday’s GBP trading was still indicative of a slowdown in momentum, with a very range-bound day against the USD and the EUR. However, some significant moves did happen outside of the London trading session as analysts and investors jostled for position in forecasting the outcome of the UK Inflation data release. The GBP pressed initially heavily upwards against the EUR but lost ground against the USD as we opened this morning in advance of the critical release.

Amongst the data, reported at 09:30 GMT today, was the Consumer Price Index (CPI) figure.  This is a barometer of the prices paid by consumers and a vital feed into the views of analysts and investors of the growth of the economy, and even indicates potential attitudes towards interest rate changes. This figure today was reported at -0.1%. The first negative figure since official records began in 1996.

Also reported today were Producer Price Index and Retail Price Index figures. Across the board, these were reported as either flat or negative. As a result the GBP lost ground quickly against both the USD and the EUR.

Next out, we have had the German ZEW survey, Eurozone Consumer Price Index figures and Trade Balance numbers too.  The German ZEW survey measures their institutional investor sentiment being either positive or negative. Today this number was pretty pessimistic and this will weigh on the minds of those looking to Germany to provide ongoing growth as a backbone for the Eurozone. The Eurozone CPI on a monthly and yearly basis remained unchanged from previous logged data. The total Trade Balance numbers for the Eurozone showed slight growth.

Still to come is a speech from the Bank of Canada Governor, Stephen Poloz, followed by Japanese GDP (which is forecast as being unchanged as well).

A lot of changes are happening in the market today and the GBP seems poised to absorb these during the course of the day. The overall movement since the releases for the GBP has been negative, though seemed to have reached a plateau as I write.

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