BoE not Expected to Monkey-around as CPI Holds Firm at 3.00%

Tuesday, February 13: the FTSE 100 struggled to make headway, as sterling appreciated on the back of stronger than expected UK inflation data which hurt dollar earners on the index, and London en masse. The FTSE 100 closed -0.13% as a result, though a continuing resurgence in the fortunes of miners limited losses on the primary index. The tempestuous swings of the past fortnight settled over the last couple of days as investors took confidence from a strong performance in US equities on both Friday, and a strong close yesterday making for relatively minor moves across large indices in Europe today.
The rally in mining stocks continued from yesterday, as higher copper and palladium prices fed into higher prices for Glencore, Evraz, BHP Billiton, and Anglo American on the primary index.
The aforementioned sterling strength(+0.5% vs US dollar) came courtesy of a consensus-beating inflation read for the UK economy in January, and the potential of an interest rate rise. CPI for the previous month came in at -0.5% month-on-month, and +3.0% on the year, narrowly defying consensus expectations of -0.6% and 2.9% on a respective sequential and annual basis. The ONS noted that price gains were driven by clothing, footwear, and recreational goods and services, in particular tickets for zoos and gardens. Inflation has now been above the 2% target for twelve months, and rhetoric from the Bank of England last week was indicative of a more hawkish approach to inflation. Consequently, economists are expectant of an increase in interest rates as soon as May in order to constrain price growth.
Across Europe, indices were lower at the close with the FTSE 100 -0.13%, the DAX 30 -0.70% and the CAC 40 -0.60%.

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