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UK inflation boosts the Pound

  • UK CPI y/y: 0.1%
  • UK PPI Input m/m: -0.9%
  • UK RPI y/y: 1.0%
  • US Building Permits: 1.12M
  • US Housing Starts: 1.21M
  • NZD GDT Price Index: 14.8%

UK inflation was yesterday’s focus as the release of the consumer price index (CPI) kept economists’ entertained. Price inflation was expected to remain flat, however the figure exceeded economists’ consensus and posted a 0.1% reading, giving the Pound a boost earlier this morning. The target of the BoE is for this to be at 2% and as Mark Carney, the head of the central bank has outlined, he expects prices to start increasing later this year but the latest slide in oil price could hinder this.

The core measure of price growth increased to its highest level in five months, contributing to yesterday’s Sterling strength. Core CPI which excludes the volatile food and energy costs increased to 1.2% from 0.8%, beating expectations. The drive in price was driven mainly by smaller clothing discounts in the summer sales that boosted inflation back to positive territory.

  • US CPI m/m
  • US Core CPI m/m
  • US Crude Oil Inventories
  • FOMC Meeting Minutes
  • JPY Monetary Policy Statement

Two high tier releases from the U.S. will be keenly watched as this will give  further insight as to when rates may rise. In the afternoon the monthly inflation figure will be posted which is set to fall to 0.2%.  Later in the evening the latest FOMC minutes will be released. The market  will be examining these carefully to decipher what members think about when rates will be increased.  This will likely see further US Dollar volatility, especially if there is a clear signal on a potential rate hike.