Inflation declined in the UK to 2.8% last month, below last month’s 3% and slightly lower than market expectations. The result has weakened sterling in early trading, although the result is broadly in line with Bank of England forecasts. The pound has so far this morning lost around 0.15% to the euro and a little more against the US dollar on the inflation news.
There was an actual price drop (not just slower price rises) for women’s clothes, an extra boost to chancellor Rachel Reeves ahead of her Spring Statement today. There were falls in recreation and concert ticket prices too – welcome news to politicians who have to pay for such items themselves these days.
Unlike the Autumn Budget which was seen by the markets as too generous in government spending and tax rises for business, Reeves’ statement today looks likely to include some £15bn of spending cuts to meet her fiscal rules, and maybe even some more tax rises. This all poses a further threat to sterling.
To lock in today’s rate – still two to three percent stronger than last year against the euro and US dollar – call your account manager on 020 8003 4915.
On Friday a busy period for data ends with Retail Sales, where a sharp drop is expected from last month’s 1.7% growth. Yesterday the CBI’s gauge of retail sales for the UK showed its largest decline since last July, and we’ll get a clearer reading of that on Friday with the Office for National Statistics’ own data.
Good news for anyone heading to Spain. We’ve just had a final result for Spanish GDP (Gross Domestic Product) which confirmed it as the second-fastest growing economy in Europe in 2024 with 3.4% growth.
