UK Inflation Further Growth Pushed GBP Higher

0
76

UK Inflation continues to accelerate and is above analysts forecasts, and input producer prices are further moving into doubledigit yearoveryear growth.

Consumer prices rose in May by 0.6, as they did a month earlier, and by twice as much as expected. The price increase of the same month a year earlier was above 2 and reached the Bank of England target. Producer price developments are predicting a further acceleration in the coming months.

Producer input prices have risen steadily over the last seven months, adding a further 0.5 in May to 4.6 yy. Producer input prices for the month jumped by 1.1, following increases of 1.2 and 1.9 in the previous two months.

Higherthanexpected inflation has provided the pound with a boost from levels under 1.41 and could potentially break the GBPUSD downward streak seen from the end of last month. Strictly speaking, high inflation is a reason for the Bank of England to signal an oncoming monetary policy tightening, which goes in favour of the Sterling.

Moreover, strong consumer inflation is seen by markets as a sign of strong final demand and the health of the economy. Together with rising oil prices, this is helping the British FTSE100 today to renew its highs since the start of the pandemic.

Source FXPro

LEAVE A REPLY

Please enter your comment!
Please enter your name here