UK inflation has just been revealed to have stayed stable at 3.8% in September. The impact on exchange rates was to send the pound into an immediate tailspin. It is currently around 0.5% down on the US dollar and 0.25% down on the euro since yesterday.
Although inflation remains well above the 2% Bank of England (BoE) inflation target, today’s result was below market expectations of 4%. So there was plenty to cheer the BoE – and to worry anyone about to make a large currency transaction overseas. If that’s you, call your account manager on 020 8003 4915 and discuss the option of locking in your exchange rate for the duration of your transaction.
The good news for the country was that core inflation, with the more volatile food and fuel items removed, fell to 3.5% – its lowest since the spring. Moreover, it was those items most felt by lower income families, such as food, where prices fell most.
Eagle-eyed retirees will note that the government bases pension rises on the September figure. However, thanks to the triple lock their rise next year will be based on the higher, average earnings figure, of 4.8%.
There is plenty more data coming up, including retail sales and the Purchasing Managers Index (PMI) on Friday, giving a clearer picture of the economic situation facing the chancellor as she plans the budget, and the BoE its next interest rate decision.
This is certainly a danger time for anyone with currency exposure, such as for a property purchase. We will be discussing all this with our partners at Your Overseas Home in a special webinar tomorrow. Register free, here.
There was some good news yesterday, especially if you’re the kind of person thrilled by the sight of a double-decker train arriving at your continental railway platform. Eurostar has revealed plans to run its own double-decker trains from London through the Channel Tunnel by 2031, as it aims to increase passenger numbers from below 20 million annually to above 30 million.
