Prior to tomorrow’s stream of influential economic data for the UK the Pound was little changed against the US Dollar and Euro this morning following the release of the nation’s Consumer Price Index for February.
The Pound Sterling Exchange Rate was in the region of 1.1682 against the Euro as of 10:02 am
Sterling was able to strengthen yesterday after developments in Cyprus caused widespread risk aversion in the marketplace.
Although the Pound posted a slight decline against the US Dollar and retreated from its five-week high against the Euro before the inflation report was released, these losses were pared after the UK’s CPI for February was shown to be in line with estimates.
Economists forecast that consumer prices increased by 2.8 per cent in February from the same period of 2012, and this morning’s figures from the Office of National Statistics confirmed this prediction. Month on month, consumer price inflation rose by 0.7 per cent.
Producer prices also increased, gaining 0.8 per cent from the previous month. Meanwhile retail price inflation was down 0.1 per cent in February from January’s 3.3 per cent.
Increased fuel prices and a weakened Pound have been cited as reasons why inflation quickened to the fastest for nine months, with gas, electricity, water and housing adding 0.11 percentage points to the annual figure.
Inflation has now been above the Bank of England target for 39 months.
In response to the news economist Philip Rush commented: ‘Over the next few months inflation should pick up and we’re not expecting it to get to target for many years. There’s room for the Chancellor to give greater clarity around the time they have to bring inflation to target.’
Chancellor of the Exchequer George Osborne is due to present his budget tomorrow, but Pound volatility could also occur in response to the release of minutes from the BoE’s latest policy meeting as well as UK jobless claims and employment change data.
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