Sterling rebounds against both currencies following an unexpected fall in inflation in this morning’s data release. The August rate’s fall to single-digit levels follows the easing of fuel costs and is the largest downward contribution the UK has seen since rates reached their highest in 40 years (with last month’s 10.1% increase). The turn of events follows Liz Truss’s announcement of a £2,500 energy bill cap last week, which could see UK households saving an average on £1,000 per year for the next 2 years until inflation is under control.
Meanwhile in the eurozone , Germany’s ZEW economic sentiment data dissatisfied markets yesterday as the index fell to a much lower -61.9 compared to the anticipated -5.9. This was the third fall and lowest reading in over a decade.
In the US, inflationary pressures intensify as figures soared way above market expectations. Annual core inflation YoY rate rising to 6.3% (the highest since March), and inflation YoY at 8.3% (above market forecasts of 8.1%.). Markets will be watching closely to see how the Federal Reserve brings the rate closer to its target in over the course of the next weeks.
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