The pound hit an 8-month high against the dollar yesterday, ahead of Brexit talks resuming in Brussels. This was mainly due to dollar weakness and the absence of any news on talks or rhetoric surrounding negotiations. As we hear more from the talks, we could see volatility from the pound. Sterling is mostly range-bound against the euro, sticking to similar levels.
A series of data came in for the UK this morning, including inflation rate. Figures released by the Office for National Statistics show that the Consumer Price inflation rate jumped to 1% in July, up from 0.6% in June. This beat market expectations of 0.6%. CPI rose due to clothing, transport costs and household items, as people returned to the shops as the lockdown eased.
Whilst this figure is well below the Bank of England’s target figure of 2%, it shows that there people are spending again. However, there are worries that rising costs will hurt consumers, especially as unemployment is rising and the furlough scheme is due to end in October.
