UK Inflation report takes it toll
Another rocky week for sterling saw mixed data releases and safe haven buying push it back and forth like prime ministers question time. What looked like a beacon of hope for the retail industry was then well and truly quashed by the Bank of England’s inflation report. A deep recession is upon us if we didn’t already know it but the outlook for the next year was patchy to say the least. In a rather heated debate Mervyn King outlined that their predictions are the best in the business but he sealed sterling’s fate with the inkling that they are prepared to start printing money if needs be. Sterling went in to free fall on the back of these comments. Lloyds bank also hit the headlines with record losses and a mere 30% fall in share price hit the pound. We can expect even more volatility as the CBI has signaled that we are in our worst economic slump since 1980. Manufacturing data will dominate the headlines this week as it is evident that it is demand hitting the sector and not credit woes. Tuesdays Inflation data will show another fall towards that magic 2% target but last weeks inflation report really put the Bank of England on the back foot. Mervyn king sealed its fate by saying ‘Im not pretending everything worked well, it clearly didn’t’. More aggressive rate cutting looks highly possible and this will continue to weigh heavily on the pound. Read Full Article »
