It was a bad day for the pound on Wednesday. Following an above-expected rise in UK inflation, the dollar gaining more than 0.4% percent and the euro over 0.5% on sterling.
UK inflation rose to 3.8% in July, driven by increases in fuel prices and the cost of food. This climb has analysts predicting that the Bank of England’s Monetary Policy Committee will slow down its pace of interest rate cuts, with there being no further reductions until 2026.
While inflation rose and the chances of an interest rate cut fell, the FTSE 100 set a record high – even while markets in Europe fell as investors sold shares in defence stocks.
Later today, data on British services and manufacturing will reveal how US President Donald Trump’s tariffs have impacted UK industry.
Over in the US, today sees the start of the Jackson Hole symposium, a meeting of the Federal Reserve’s central bankers. Along with a speech from Fed Chair Jerome Powell on Friday, the talks will give greater clarity over when Americans can expect an interest rate cut.
Like the UK, today sees the publication of European services and manufacturing data. The EU bloc has been much harder hit by US tariffs and the impact in today’s reporting may be more severe.
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