By Ashley Finill
This morning in the UK, the office of national statistics announced that inflation in the UK came in at 2% for June, slightly higher than expected. Last month the figure had fallen to the target of 2% but has not been below 2% since April 2021. Economists had forecasted a drop to 1.9% for June in which case the Bank of England would have been more favourable for an interest rate cut on August 1st. However, with the rate remaining at 2% the BoE may want to see more evidence of the economy in the UK make more of a recovery before pushing the button on a rate cut from 5.25%. Before today’s inflation announcement the chances of a rate cut had been 50/50 but with this announcement we could see another hold on the interest rate. Only 2 of the 9 members back a rate cut at the BoE’s last meeting and with inflation remaining the same it may be that a cut could come later in the year. Since this morning’s inflation news there has been a slight boost for Sterling against both the Euro and US Dollar. The interest rate decision from the BoE on August 1st is now quite tight to call, so should you have a requirement between now and the BoE meeting it is worth getting in contact with A Place in the Sun Currency today to discuss your options.
King’s Speech in House of Commons today
In politics, today will the first time in 14 years that Labour has set out their agenda for government in the King’s Speech. Kier Starmer is to set out over 35 bills which he says will “rebuild Britain”, following the King’s Speech MPs will put questions to the Labour party in the House of Commons, where leader of the opposition Rishi Sunak has said he will be holding the Labour government to account, where they have promised no tax rises on working people and no plans for tax rises beyond what’s in their manifesto. Sunak added Labour tapped into the public’s desire for change which they now must deliver and “we on this side of the house will hold them accountable for delivering these commitments for the British people”. The King’s Speech takes place at around 11.30am in ceremonious fashion.
Data remaining this week
With 3 working days remaining there are still more key data releases to take note of which are likely to influence the currency market. Today at 9am, the EU release Harmonized index of consumer prices which is expected to remain at 0.2%. At 12.30pm building permits and industrial productions is posted in the US. Overnight the unemployment rate is posted in Australia. Tomorrow morning at 7am the unemployment rate in the UK is announced which is could being early morning volatility to the markets. At 1.15pm the ECB announce their interest rate decision, this is expected to remain at 4.25% as they cut at their last meeting, their press conference will follow at 1.45pm. To finish off the week, in the UK retail sales are released at 7am, the figure is expected to contract to -0.4% from last month’s reading of 2.9%. To finish off the week, Canada also releases retail sales figures at 1.30pm.