Rising Inflation in UK: BoE Faces New Hurdles
The UK’s inflation rate inches up to 2.2% in July 2024, the first increase this year, driven by higher costs in housing and household services, all complicating the Bank of England’s efforts in stabilizing the economy.
The Bank indicated that it now sees inflation peaking at about 2.75% in the second half of this year, as price rises in the service sector are proving more resilient than expected. On the other hand, they do expect a gradual decrease of inflation to 1.7 percent in 2026 and 1.5 percent in 2027. (The Independent).
Major Currency Pairs
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EUR/USD: The Euro is trading around 1.0950, pressured by weak German economic data and a strong U.S. Dollar.
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GBP/USD: Volatility was seen near 1.2700 in the Pound due to UK inflation news, fuelling further BoE rate hike bets.
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USD/JPY: The dollar strengthened against the yen, trading around 147.20, supported by divergent monetary policy bets in the United States and Japan.
Commodities
Oil: West Texas Intermediate hangs around $77.20, still slightly lower after easing Middle East tensions and concerns over global demand.
Gold: Gold would be trading around $2,465, showing mild bounces driven by inflation concerns and global uncertainties.
Upcoming US Inflation Data
The US inflation rate for July will be published later at 1:30 PM. Consensus has it remaining at 3.0% year over year, in line with June’s figure. If this is the actual result that surfaces, this might further propel the Federal Reserve along the current course.
Looking Ahead: Key Data on August 15, 2024
- UK GDP MoM (June): Scheduled for 7:00 AM, the consensus expects growth to stagnate at 0.0%, down from 0.4% in May.
- US Retail Sales MoM (July): At 1:30 PM, U.S. retail sales data will be released, with expectations set for a modest 0.2% increase, compared to 0.3% in June.