Sterling Soars As UK Inflation Beats Expectations

Tuesday, 12th September: UK inflation data this morning pushed sterling higher; pushing to a one-year high against the US dollar. Rising from 2.6% in July to 2.9% in August, CPI remains well ahead of the Bank of England’s target of 2% as clothes and footwear prices had their biggest price rise in almost three decades. Inflation has been steadily rising since the UK’s decision to leave the EU last year, which led to sterling depreciation and ultimately import prices increasing. Against both the euro and US dollar the pound soared, breaking past €1.11 and holding steadily higher over the course of the day, while the higher position against the green-back remained the same. At the time of writing £/€ is €1.1098; £/$ @ $1.3273.

It turns attention to Mark Carney and the Bank of England who meet later this week for Thursday’s MPC meeting. The Bank has previously said it expects inflation to reach 3% in October, but looking at it to start easing in early 2018. Despite inflation hitting its joint highest level in more than 5 years, the BoE still don’t look to be raising interest rates for the first time in a decade, although they are expected to keep the possibility of a rate hike on the radar.

JD Sports have today reported a 33% jump in first half pre-tax profits, with sales increased 41% on the same period last year, defying fears of a UK consumer slowdown among retailers. Full year results are expected to be at the upper end of expectations, and the results come after a warning of a slow-down in the sector after Footlocker reported a fall in like-for-like sales in August.  Shares closed at the top of the mid-cap 250; +8.99% @£3.73.

The rise in sterling today led to the FTSE 100 giving up early gains, more than the reduced risk Hurricane Irma eased and North Korea remained out of the headlines.  Indices in Germany and France closed 0.40% and 0.62% higher respectively. Attention turns to Apple as they look set to launch the new iPhone at their event starting at 6pm UK time; Apple shares at the time of writing the shares are down 0.38% @ $161.

Rumours are the new iPhone X looks set to cost $1,000, or thereabouts. This equates to c.£753. For slightly more, at £829, you could book yourself a ticket to the FIFA World Cup Finals in Russia next summer. The first wave of tickets for the 2018 World Cup go on sale this Thursday with fans being able to submit their applications via FIFA’s website, and tickets to be sold in two phases. For those travelling to Russia, ticket prices will range from £79 for a second-round match, while a seat at the final in Moscow will set you back £829, a £151 increase on the equivalent ticket at the Brazil 2014 final in Rio de Janeiro. Russian residents’ prices start from £17.

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Oil edged higher after OPEC’s latest monthly report said production fell for the first time since April; lower by 0.24% to 32.76m barrels a day in August, a sign that its efforts to reign in global supply are starting to pay off. OPEC and 10 other producers last year agreed to cut about 2% of global oil production in a bid to drain a global oversupply, although an oil production boom in the US scuppered these plans, while Libya have continued to undercut OPEC’s efforts, though its production fell significantly according to this latest report as a result of pipeline closures and disruptions to its oil fields.

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