Today the British CPI numbers came out. CPI year on year came in at 2.1%, higher than the expected 1.9%. This all but ends any speculation that the Bank of England will cut rates this year. Personally I expected a surprise to the upside this time because of surging oil prices. The full extent of the near record oil prices is not fully priced into the CPI figure yet, as the figures are always lagged to a degree. It can often take several months for events to fully price themselves into the figures.
A cut may be on the cards next year if inflationary pressures ease, but currently inflation is back above the central banks 2% target.
The pound has soared today, currently up well over 200 pips or 1% for the day after it’s biggest dip over the past few days for quite a while.
