UK inflation was unchanged at 2% in June 2024, marking the second consecutive month it has held at the Bank of England’s target. Although inflation remains at its lowest pace in three years, the pound was on the rise this morning as some experts predicted the headline figure might dip down to 1.9%. Core inflation was also unchanged at 3.5%.
Sterling traded slightly off its recent highs against the euro and the US dollar in Tuesday’s session, but remained stable. EUR/USD meanwhile recovered from a data-driven stumble to finish the day at around parity.
The German ZEW Economic Sentiment index and the eurozone’s own study gave the euro a nasty surprise. The German metric fell to 41.8 in May from last month’s 47.5, which resulted in some euro weakness over the course of Tuesday.
US retail sales were unchanged in June, having risen by 0.3% in May. That was in line with market consensus, which meant the impact on the US dollar was limited.
Much more significant for the US dollar has been the growing anticipation of rate cuts from the Federal Reserve. Federal Reserve chairman Jerome Powell said on Monday that he would not tip his hand in terms of when the first cut will come, but he did say that the data was becoming more supportive of lower rates.
With demand for the US dollar low, gold continued to hover around its highest level since late May yesterday. Gold breached $2400 per Troy ounce in yesterday’s session on expectations of a cut from the Fed, but remains some way off its all-time high set earlier this year.
Brent crude oil meanwhile fell to around $83 per barrel yesterday, as China’s sluggish (relative to their historical figures, at least) growth data prompted fears of an economic slowdown.
Market research firm Kantar has said that UK grocery inflation is at its lowest level in three years. According to the company, price rises fell to 1.6% in the four weeks to 7 July, with toilet paper, dog food and butter the biggest fallers.
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