The bludgeon has dropped by 0.4 per cent against the US dollar
This decline is down to last negative sentiment from Tuesday’s UK wage growth slowdown, as spout as today’s unimpressive inflation figures.
The rate of price growth in the UK has remained staid for May’s readings, printing at 2.4 per cent on the year and 0.4 per cent on the month.
Entire, annual UK inflation rates remain at a one-year low but above the Bank of England’s (BoE) 2 per cent aim range.
These results won’t put any additional pressure on the BoE to raise interest prices, but they do mean that UK households have dodged another wage sweetheart, for the time being.
It had been forecast that annual inflation power rise to 2.5 per cent because of higher fuel prices, but the impacts of this increase might not be felt until June’s reading.
In an chaperoning statement, looking at price changes in detail, Office for National Statistics (ONS) analysts stated:
“Ascent motor fuel prices produced the largest upward contribution to the modify in the rate between April and May 2018.
“There were also large upward any way you look at it become operatives from air and sea fares, which rose between April and May this year but cut between the same two months a year ago, influenced by the timing of Easter.
“Incompletely offsetting downward effects came from price changes for line of works, domestic electricity, food and non-alcoholic beverages, and furniture and furnishings.”
On the other side of the currency duo, the US dollar has appreciated against the pound and other peers as a result of US inflation figures and a key Federal Reserve meeting later on.
Tuesday’s US inflation rate calculates for May showed above-forecast growth for the year-on-year reading, with a rise from 2.5 per cent to 2.8 per cent.
For USD dealers, this is good news as it heaps more pressure on the Fed to make at least three non-objective rate hikes in 2018; so far there has only been one in March.
1 of 8
US households have a less bright situation, as the latest inflation rate rise now puts incomes under pressure from higher costs for everyday goods and services.
Looking winning, the US dollar is likely to retain the upper hand over the pound for the support of the day as the evening’s Federal Reserve interest rate decision approaches.
Fed propers are largely expected to vote for higher interest rates, with a hours from 1.75 per cent to 2 per cent.
Although this has largely been bountied in, the US dollar could still rise sharply on such news.
Thursday morning could see the pulsate recover in the GBP/USD pairing, as annual UK retail sale levels in May are predicted to illustrate considerable growth.