The Pound is continuing to trade in overbought territory as both the UK inflation and labour market scene remain 'sticky'. The latter was released this morning which showed jobs are still holding steady under a high interest rate environment and wages are still too high. Both results mean an interest rate cut are unlikely for the UK next month.
Yesterday, UK services inflation missed expectations by a wide margin (5.7% v 5.1%). This has been a result mainly down to the Euro 2024 tournament and Taylor Swift's tour of the UK. Hotel and restaurant prices were the main culprits in the rise of services inflation, which doesn't bode well for those having a staycation this summer.
Clothing and footwear is heading downwards, as is energy and goods prices, but keeping a roof over our heads continues to rise (mortgages, rent, repairs and insurances).
It's a tricky situation for the Bank of England as moving too quickly can mean inflation heads higher and moving too slowly can mean a prolonged economic downturn. Chances of an interest rate cut next month is now unlikely after the above releases.
It means, it's still a fantastic time to think about banking in the Pounds recent gains and either a Forward Contract or hedging can help you here.
| On this day - |
In 64, the Great Fire of Rome begins under Emperor Nero In 1925, Adolf Hitler publishes Mein Kampf In 2012, Kim Jong-un is appointed Supreme Leader of North Korea In 2013, Detroit, Michigan, files for bankruptcy, becoming the largest US municipal bankruptcy ever at $18.5 billion |
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