Pound Sterling Bouyed by Hot Inflation Figures

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UK inflation came out on the strong side when released on Wednesday August 14, which would typically prove supportive of the British Pound and we have seen some gains for the under-pressure UK currency.

However, we notes the advances are relatively contained and this supports the notion that strength in the Pound is likely to remain limited in the current environment while the market displays a strong bias towards the downside.

According to the ONS, inflation for July read at 2.1% year-on-year, ahead of expectations for a reading of 19%, meaning the rate is now taken above the Bank of England’s target of 2.0% inflation.

Core inflation – the kind that measures more organic sources of inflation, thereby excluding global variables such as fuel prices – rose 1.9%, ahead of expectations for 1.8%.

Inflation picked up from June largely thanks to clothing and footwear prices beginning to rise again after having been a drag on prices for some months now.

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