The UK will be in the spotlight this morning as the latest set of inflation numbers is released. The data reflects December price changes and is expected to see a small decline from 10.7% in November to 10.5% last month. From the Bank of England’s perspective, these numbers are shocking. They target 2% per annum and were the first major central bank to raise rates after the pandemic. However, in hindsight, they did not act aggressively enough with their increases and should have taken a leaf out of the Fed’s book.
Given the recent inflation releases from across the globe, it’s possible we see a downside surprise, which would be positive for the BoE and the UK economy. The pound will react accordingly after having a strong performance yesterday which saw it push toward $1.23 and €1.14 against the US dollar and euro, respectively.
Written by Viv Savani. 6:48am, January 18th 2023
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