Alan Hill
Treasury Consultancy
Inflation crashed through Government Target
The MPC’s forecast that inflation in U.K. would peak at 2.8% appears in tatters this morning following the release of producer and consumer price data.
The pound rose by 1% following the news to a high of 1.2460. The possibility of a hike in rates has risen significantly and will underpin the pound as we move towards the start of Brexit negotiations.
Inflation in February rose to 2.3% in February following a 1.8% read in January. The rise in producer prices, the factory gate cost of raw materials, rose by 19.5% slightly less than January’s 20.5 increase.
This warns of further inflation down the road as the fall in the value of the pound after the Brexit vote continues to feed into the economy.
Last week’s MPC decision to wait and see looks vulnerable now and the single dissenter, Kristin Forbes concerns about the BoE falling behind the curve look justified.
On Thursday, we see the release of retail sales data and should the price data have had an adverse effect on consumers spending then serious questions are likely to be asked.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.