Market insights

UK inflation comes in lower than expected - Market Insight 19th July 2023

At breakfast this morning the UK released it's June inflation number. Analysts had expected 8.2% annualised growth and the number came in at 7.9%. Food and fuel costs are being attributed to the drop from 8.7% in May. This is a good sign for the consumer, but a less rosy situation for the Pound. Last time around the Bank of England hiked rates by an unexpected 0.5% which caused the Pound to spike versus major currencies such as the Euro and the Dollar. This lower inflation number could mean a pause in further rate hikes....and could also pave the way for rate drops towards the end of the year if the pattern continues. The Bank of England Governor, Andrew Bailey, has previously warned of an overshoot of the inflation number below the target of 2%.

There's further inflation numbers out today from the Eurozone with Eurostat releasing it's harmonised consumer price index where analysts are expecting a 5.4% annual growth reading.

The early hours of tomorrow has an eclectic mix of data. Japanese import and export numbers are followed by the Australian unemployment rate so AUD comes into focus before breakfast. The rate is expected to remain at 3.6%.

Business news is obviously dominated by the inflation numbers, and it's not the only positive headline for the UK economy. Tata has announced plans to build a £4 billion battery plant in Somerset which should be fully operational by 2026 and create thousands of jobs in the area.

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Economic calendar

EUR: 10:00 Eurostat Harmonised Index of Consumer Prices

JPN: Thursday 00:50 Imports and Exports

AUS: Thursday 02:30 Unemployment Rate

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