The EUR/GBP eased by 18 points after a disappointing ZEW print weighed heavily on the euro. UK PPI was surprisingly low, while CPI came in on a positive note. The inflation data out of the UK wasn’t so great this morning, especially from a consumer perspective. The CPI figure remained at 2.7% in September, against expectations of a drop to 2.6%. At a time when wages are rising at a measly 1.1%, these high inflation figures are very unwelcome. The Bank of England could also do with a drop in the figure, given that one of the reasons why no one trusts its forward guidance is because the 2.5% threshold for inflation expectations is still 0.2% below the current level of inflation. With energy prices due to rise later this year, we’ll be lucky to see inflation fall below 2.5% any time soon. German data helped limit the decline of the euro today. Germany’s major business and sentiment surveys have strengthened markedly. Ifo Business confidence rose for a fifth straight month in September to the highest level since April 2012, ZEW investor sentiment climbed hit a three-year high and GfK consumer confidence hit six-year highs. Tuesday’s release of the Oct ZEW survey will be closely monitored and whether its expectations index will rise for the sixth straight month.
Posted on: Wed, 16 Oct 2013 09:00:27 +0000
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