Yesterday proved that good news for the economy and public isn’t always reflected in the currency, when a sharp decline in monthly inflation led to the pound weakening.
Around 1.5% was knocked off GBP/USD and 0.75% off GBP/EUR, taking with it all the gains of the past week.
The big news of the day was inflation falling by 0.6% in January, following December’s 0.4% rise. The drop was bigger than expected and added up to an annualised rate of 10.1%. Moreover, the ONS’s data for core inflation, with the more volatile food and fuel prices removed, was below yesterday’s annual earnings data.
One of those declining prices was UK houses, where the average home cost £294,000 in December, which was £2,000 less than in November.
UK inflation readings were in sharp contrast to yesterday’s Spanish inflation figure which was rising by some measures, and US inflation, which was revealed on Tuesday to be above expectations.
On the plus side, retail sales were revealed to be well above expectations in the USA, decisively reversing December’s decline to rise 3% in January.
Elsewhere in business news, the troubled airline Flybe failed to find a buyer, while on the high street McDonalds raised prices and Subway started looking for a buyer.
The political event of the day came from Scotland’s First Minister Nicola Sturgeon, who announced that she is standing down as SNP leader.
Another union has refused to accept a pay deal, joining health service and railway staff. Fresh waves of strikes are being planned.
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