Today sterling continues to strengthen against the euro but has weakened against the dollar. Sterling’s initial reaction to the rate increase was to go higher, however gains were soon after relinquished. This follows the Bank of England’s latest inflation rate. Today’s figures beat market predictions of 9.4%, with July’s inflation rate hitting 10.1% – more than 5 times higher than the Bank’s target.
In energy news, conservative leadership candidates Truss and Sunak have ruled out freezing energy prices. Truss said “throwing money at the problem without dealing with the root cause” is “not right”. Sunak also stressed that he will not follow policies that “risk increasing inflation” as this is “certainly not Conservative”.
No significant eurozone data today however tomorrow, Spain’s balance of trade data will be released. Markets are expecting a deficit of €7bn.
Today the US will release data on retail sales and minutes from the Federal Open Market Committee (FOMC) will also be released. Chair Powell said the central bank was “looking for moderately restrictive level by the end of the year” (a 3% to 3.5% level).
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