Inflation takes off

Today's news headlines: 

‘UK inflation more than doubles in April as energy prices rise’. A bounce in oil prices translated into higher fuel costs last month which drove inflation to 1.5% over the year. These conditions were to be expected as commodity prices reached all-time highs. The Bank of England have reiterated that if inflation begins to stay above its 2% target, then intervening and tapering monetary policy is not out of the question. Inflation is much higher in the US, which posted a rate of 4.2% in the same month as the UK, unsurprisingly rumblings of an interest rate hike are beginning to emerge. (Financial Times)

‘Boris Johnson urges Britons to avoid “amber list” countries for holidays’. As international travel begins to restart for the UK, Boris Johnson has emphasised that those on the amber list are only available for travel for essential matters and should not be used as holiday destinations. This warning comes as efforts are stepped up to keep a lid on the India coronavirus variant to ensure that lockdown easing plans are not derailed. Currently, there is no significant data suggesting that a full easing of restrictions cannot go ahead as planned in a month. However, if cases and hospitalisations begin to experience a significant up-tick then delays may be possible. (Financial Times)

Today's events, rates, and data 

  • A marginal fall in the UK unemployment rate to 4.8% helped stocks stay positive yesterday, as the FTSE 100 crept 0.02% higher and the FTSE 250 gained 0.53%. Cable continues to hold ground just below $1.42. UK retail sales data out on Friday will provide a clearer picture on how consumer spending is driving inflation. 

Today's events

UK CPI y/y: 1.5% vs 0.7% last month
ECB Financial Stability Review: 9:00am
Canada CPI m/m: 1:30pm
US Crude Oil Inventories: 3:30pm
FOMC Meeting Minutes: 7:00pm

Interbank rates

GBP/USD: 1.4183
GBP/EUR: 1.1590
EUR/USD: 1.2239
USD/CAD: 1.2064

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