UK Inflation data expected to rise today

Home » Foreign Currency News » UK Inflation data expected to rise today

Yesterday saw the US Dollar come under pressure as oil prices rose following the Allied intervention in Libya. Although the US seem to be taking a back seat and letting the UK and France run things, concerns over their role in the UN sanctioned no fly zone, and how this will affect relations with the Middle East were at the heart of moves in the currency markets yesterday.

That said, why the Euro and Sterling should benefit is somewhat perverse, given the leading roles being taken by both of their Governments. Sterling was able to reach a new, 15 month high against the US Dollar at £/$ 1.6390 on the foreign currency exchange markets this morning. 

US data yesterday didn't support the US Dollar either as existing home sales fell 9.6% during February. The only piece of UK data to note yesterday was the UK Rightmove house price index which rose for the 3rd consecutive month, up 0.8% in March following a 3.1% gain in February.

Today is inflation day in the UK with expectations for today's consumer price index (CPI) to show another increase of 4.2% in the year to February and the retail price index (RPI) forecast to rise by 5.2%. It is the RPI that takes the main role in wage negotiations because it is more relevant to actual living costs. In this post-recessionary environment employees are more likely to grovel at the feet of one's employer's in gratitude for any inflation related pay-rise.

In normal circumstances a higher inflation figure would see investors filling their boots with Sterling in anticipation of higher interest rates. The problem for investors is the release tomorrow of the minutes from this months Monetary Policy Committee meeting. It could still be Sterling positive if another member voted in favour of a hike but, more likely, it was the same three members voting for a hike again.

There are two other potentially influential UK figures on today's agenda; public sector net borrowing and the CBI's industrial trends (orders) survey.